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Submitted to: CSR Committee, Goa Institute of Management In partial fulfilment of course requirement in Corporate Social Responsibility By: Abhishek Shrivastava, Trevor Vaz, Chris Gurjao, Prateek Jha, Keshav Jha, Dheeraj Jain PGP1 2011-2013, Goa Institute of Management

Table of Contents
Introduction ................................................................................................................................ 2 Academic Learning .................................................................................................................... 3 Personal Learning during Course of Visit ................................................................................. 5 The Outcome of the Project and Lessons thereof .................................................................... 11 Recommendations .................................................................................................................... 16 Conclusions .............................................................................................................................. 18 Picture gallery...19 References ................................................................................................................................ 20

Financial inclusion is not about giving handouts to anyone, its about getting the people to help themselves.------------ Barry Whiteside

This report is intended to provide a complete view of the experiences, observations, challenges, learnings and insights gained in the entire process of the project from its inception to completion. The report on the project Financial Inclusion by Corporation Bank aims to provide a comprehensive analysis of the current Business model adopted by Corporation Bank for its Financial Inclusion Programme .The report further talks about the deficiencies and limitations about the Financial Inclusion Programme. Moreover, the report tries to identify a successful Business model for the Financial Inclusion programme of the Corporation Bank and recommends some fundamental changes in its operations so that this Programme can be implemented effectively and successfully in the coming days. The report also suggests some measures to increase the financial awareness and simplify the process.

Academic Learning
(i)Observations and analysis of the beneficiaries
The beneficiaries of the project are the people in rural and urban area who are economically weak like farmers, daily wage earners, labourers, who do not save their money because of no bank facility near to them or due to hassles involved in a bank transaction. We are currently working in two villages Amona and Kudnem. Most of the villagers are people with limited means who find it difficult and uneconomical to travel to city for a bank transaction. The Financial Inclusion Program is aimed primarily at these people so that they can enjoy the services of bank at their door step.

(ii)Observations and analysis of the client organization

The client organization is Corporation Bank, a Public Sector Unit with 57.17% of Share Capital held by the Government of India. In December 2010 Corporation Bank announced the completion of its financial inclusion outreach at all villages allotted to it, having population of above 2,000. The bank is committed to the cause of Financial Inclusion Program and has assiduously undertaken steps to implement it effectively. The bank has dedicated the responsibility of approaching the masses and carry out transactions on behalf of the bank as agents to business correspondents. The bank has a tie up with Integra in providing the technical solution. However the bank is facing some hurdles in the noble cause. The following major issues are being faced by the business correspondents pertaining to the use of the equipment for carrying out the transactions.

Key observations during analysis of client organization and its operations

1. Technical glitches (fingerprint, network) in the transaction machine provided by Integra. 2. No interface between BC and solution provider Integra for quick trouble shooting. 3. No proper training to BCs for smooth operation of the machine. 4. No helping manual provided to BCs regarding the process flow and operations. 5. Cumbersome process for opening accounts (application form is beyond a laymans understanding). 3

6. Due to none functioning of opened accounts and due to technical issues, there has been a negative sense prevailing among villagers regarding the success of financial inclusion programme itself. 7. Lack of awareness among people regarding the programme. 8. There is a lack of motivation among BCs and the integra personnel to continue with this programme. This might be due to low incentive provided to them and the job also requires higher dedication on their part which they might be finding difficult to assign.

Network Issue

Though Device having other potential modes of network connection

Personal Learning during Course of Visit

(i)Reactions towards beneficiaries and client organization
We began our Corporate Social Responsibility (CSR) project by visiting Corporation Banks branch in Panaji where we were given a brief description of the financial inclusion program of the Corporation Bank by the General Manager Mr. B.B. Tejappa. The presentation gave us a clear idea of the financial inclusion program undertaken by the Corporation Bank. We realized that if implemented properly the program can make a substantial difference to the lives of many people in rural area who cannot save their money. We presented to the General Manager the roadmap of our project and the tasks we would be undertaking. After his approval, we proceeded to the Corporation Bank branch in Bicholim and discussed our project with the branch manager Mr. Mervin A. Fernandes. We discussed with our Faculty Guide at length the scope of our project and our roadmap for future. It was agreed that our first step should be to meet the business correspondents of the two villages which were assigned to us: Amona and Kudnem and identify the various challenges faced by them in implementing the program.

On 28 July 2011, we travelled to the Bicholim branch of the Corporation Bank to interact with the business correspondents of the bank for the villages Amona and Kudnem. We were introduced to the Business Correspondents (BCs), Mrs. Anushka Dessai and Mrs. Uttara Malik, by the branch manager Mr. Fernandes. Mrs. Anushka Dessai is the present sarpanch of Amona while Mrs. Uttara Malik works as a secretary at the Kudnem village milk cooperative. We gave a brief description of our project to the business correspondents and it was decided that we would visit the respective villages from the following week. We also started working on building our CSR repository.

In August, we went to Kudnem village to meet the business correspondent Ms. Uttara Malik. There we got hands-on experience on the equipment used by the BCs. We observed two major issues faced by the BCs in using the equipment:

1. Finger Print Detection - The finger print scanner of the equipment is highly sensitive to misallocation of the finger as a result of which many times when the user logs in to the system using his fingerprint there is a login error. 2. Improper Training to use machines- As told by the BCs the trainers from Integra (technology partner of Corporation Bank) were not well acquainted with the functioning of the machine due to which they could not train the BCs properly.

We also visited families in Kudnem to educate and inform people about the financial inclusion scheme. We visited 6 families of which 2 had no members opting for this scheme but assured that they would do so after we briefed them about the advantages and benefits of the same. The remaining four had at least 1 member who had already opted for the scheme but were unaware of what it was all about and how that could benefit from it in day to day life.

Later that day, we visited the village of Amona and interacted with its business correspondent, Mrs. Anushka Dessai. She too was facing the similar issues like the ones faced by Mrs. Malik with the machine. We also visited 3 families at Amona of which 1 has 2 members who have opted for the scheme, another having one member and the third family we visited had some financial problems but did not give any assurance whether they would like to opt for it. We also briefed all about the benefits of the same.

In September, we visited Kudnem village as per our scheduled visits. First we visited a houses where we managed to open three accounts all being members of the same family. There was a slight problem while operating the machine i.e. the finger prints of the new account holders were not getting registered. But we somehow managed to get them registered and all necessary details were successfully registered. The reason for the same being the chip needs to be cleaned every third time a finger print needs to be recognised. We met the technical consultant from Integra at Mrs. Maliks residence the following week. We discussed various issues regarding the operation of the device as well as how the whole process would get started. He seemed to have little idea about the device as he was from a non-technical background. Ms. Malik had also complained earlier about the technical consultants inability to answer her queries and had requested him to kindly get her queries

addressed which he failed to do even on his third visit. The consultant also took the data of the newly created accounts on his pen drive.

There have been constant complains from both the BCs that the account holders have been constantly asking them when the operations would be starting. Also people availing of the Dayanand Rozgar Yojna scheme have requested whether the Rs. 1000 that they receive from the Government could be transferred to their no-frill account so that it would save them the trouble of travelling out of the village to the nearest Corporation bank branch to withdraw money.

Visits continued as per the weekly schedule and our main aim till this point of time was to try and create as much of awareness as we can and try and convince people to open these no frill accounts explaining to them the benefits of the same. We interacted with a lot of families and individuals from the two villages and tried to spread a lot of awareness about Financial Inclusion and how this initiative has proved to be successful in other parts of India. In October 2011, our team had a comprehensive meeting with Mr Fernandes (Branch manager, Corporation bank, Bicholim), Mr. Pramod (Financial inclusion regional in charge, Corporation Bank) and the Integra technical supervisor over the deadlock in our project and Mr Fernandes also expressed his concerns over many of the issues raised by our group. The meeting was also attended by one of the BCs, Mrs. Uttara Malik.

During one of our visits at the residence of the Kudnem BC (Mrs. Malik), we were told by the BC that she could not carry out the process for the money that was deposited by the account holders. We later identified that this was due to the Idea network that was responsible for the failure of the connection.

Mrs. Malik informed us that in spite of her repeated requests to Corporation Bank there had been no replacement of the SIM card in the machine. The BCs had requested for a Vodafone SIM card in place of the existing Idea SIM card because Vodafone is the only telecom network that has a strong signal in the local area. After repeated trials, we were not able to establish a network connection and hence the Day Begin process could not be carried out.

We also spoke to a few prospective customers who had been invited by the BC to her place and explained the purpose of this facility to them; they seem to be convinced and showed some willingness to open an account for the same.We also planned the activities for the following weeks that we would be visiting the village. We requested the BC to invite more villagers to her place who were not account holders so that we could speak to them about the schemes as well as convince them to open accounts. We also requested the technical consultant from Integra to be available if possible during our next visit to the BCs place.

The visits in the month of December were aimed at opening new accounts and briefing people about the branchless banking schemes.

During our first visit after our term break in January there were all together 5 families invited by Ms. Uttara Malik at her residence on our request. We reached the venue at around 2 p.m. in the afternoon. Once all the invitees had reached her residence we started briefing them about the branchless banking scheme and it benefits. They seem to be convinced by what was at offer and promised to open accounts for the same. Two of them did open accounts at that very moment and the rest promised they would do so in a few days. We also clarified a few common queries they had regarding this facility and how they could benefit from it.

Our visits from the month of January till the last visit were concentrated in the Kudnem area as we were requested not to visit Amona as a result of most of our visits being cancelled at the last minute by the Amona BC Mrs. Anusha Desai citing personal reasons since the month of November. This was reported to Mr. Merwin Fernandes during our comprehensive meeting with him in the month of January to brief him about our progress so far and future course of action who then took the decision of working only in the Kudnem area.

There were a lot of issues regarding this project right from the start till the end from the objective being changed from the technical aspect to awareness spreading. There were a lot of other issues related to the project, the broader aspects being the operational issues which made the execution of the scheme very difficult as people were very cautious and seemed uninterested as the project had not gone live even after a year passing by after they had opened their accounts. Also there were repeated visits by our then project guide Prof. Ram who tried to bring this project on track when we had a few meetings with Mr. Merwyn Fernandes. We managed to spread quite a bit of awareness about this project in the Kudnem 8

village and the BC Mrs. Uttara Malik seemed quite satisfied by this effort as she found it very easy to open accounts when we educated the people about this scheme. Though the project went off track in the Amona area as the BC seemed uninterested at a certain point in time we

did manage to make inroads as far as the Kudnem village was concerned.

GROUP MEMBERS (ii) Reactions towards group-members

At first the group members felt a lot of uncertainty towards each other. We had recently joined Goa Institute of Management, and although 4 of the 6 members were from the same section we were practically strangers at the beginning of the project. This led to an initial phase of awkwardness regarding each other. The difference in personal schedules due to


being from different sections also meant that we had to do a lot of coordination, both online and offline.

Due to the time spent together doing the project, the group became more cohesive. Our shared experiences while dealing with the faculty guides and the clients has taught us to communicate better, both as individuals as well as a group. The group members also communicate more freely among themselves. Group Strengths: o Willingness to learn o Patience while dealing with uncooperative people o Perseverance to continue with the project in spite of difficulties o Ability to think out of the box while problem-solving Group Weaknesses: o Problems regarding knowledge of local language (only one group member can speak fluent Konkani) o Possible lack of assertiveness

The group can build on its strengths by doing projects that gradually take them further outside their comfort zone. They can also handle projects that deal with hands-on problemsolving. To overcome its weaknesses, it is possible to take a crash course in speaking the local language before starting the project. Some methods for effective negotiation should also be learnt by the group.



The Outcome of the Project and Lessons thereof

As far as the outcome is concerned, due to technical glitches in the system, there could not be any operational or functional improvement for the client and any long lasting effect on beneficiaries. However, due to persistent effort in publicizing the product among villagers (beneficiaries) helped in increasing the awareness about the project among them. Our consistent effort in analyzing the shortcomings in the system helped client in diagnosing the problem in a better way. Earlier, the client was not able to sum up all the problems in the operating machine like network issues, delay in fingerprint detection and authenticity confirmation etc. which became evident only after our team came to analyze the problem, which they have decided to improve on so that the programme could be implemented successfully.

Again , the beneficiaries could not be benefitted a lot because of the non-operation of the system, however, as far as the publicity of the programme is concerned, our team helped BCs in opening a number of accounts and thus in proliferating the reach of the programme. Moreover, the team held a number of awareness programmes for the villagers along with the BCs to increase the financial awareness among the villagers. Spurred on by our encouragement, several persons opened accounts and also suggested that the Bank link the NREGAS and other beneficiary and pension schemes to their no-frill accounts operating under the financial inclusion programme of the Corporation Bank.

If our team had to do the programme again, we would like to increase the penetration to a more extent in terms of facilities provided like as mentioned above like beneficiaries schemes like NREGAS and other payments like pensions etc. This would not only help in publicity of these schemes but also in eliminating the irregularities and corruption prevailing in such lower levels .Also, we would like to extend this scheme to other areas which are more concentrated by labourers and low wage earners who actually require the benefits of financial inclusion.

From the aspect of business, we were able to diagnose some problems like the financial inclusion programme was not targeted to the needed segments. For example, most of the operational villages were already self-sufficient and were inhabited by mostly middle-class



people; they were opening accounts for their personal convenience or to avoid travelling a long distance to banks. Also, the business model of the Corporation Bank and the vendor Integra was faulty and unsustainable. There were number of shortcomings in the hierarchy of work distribution and its control. The BCs and technical person were being paid a considerably small salary and were therefore not motivated enough to do such work which needs utmost dedication and hard work. There were a number of glitches in the operational aspect of the process. Hence, from business point of view, there was a lot of scope in improving this business model, the targeted segments and other allied services which could be added to make the scheme more lucrative and attractive.

To an extent, members came to know about the other aspect of business and corporate world CSR. The business and corporate have to give back a part from their profit back to society for its uplift. This has inculcated a sense of responsibility and learning which we assimilated and was one of the biggest contributions by the entire project. We learned it is the

responsibility of all business houses to give back something to the society from which we are profiting.

As future managers, we gained insights into team work, how business really works on the field, and prerequisites for a successful business model, the importance of understanding the necessities of the targeted consumers, customer expectations, operational deficiencies and some marketing skills. 1. When we addressed the gathering of villagers about the usefulness of the financial inclusion scheme by Corporation Bank, we discovered what skills are needed in marketing the product and how to present in front of the targeted consumers. We learnt a very important concept that marketing is providing consumers what they need rather than what we provide. 2. Similarly, when we were on field to study the operation of the programme, we learnt what are the essential things required for a successful business model to deliver and sustain in field. Both the business model as well as its execution should be robust enough, with proper planning and precision, which was lacking in the financial inclusion programme by Corporation Bank. 3. Also, when we were on the field and interacted with targeted consumers, we learnt that for business to succeed, one should keep constantly communicating with the consumers to know exactly what they need and to customize the product according to their needs. 12


Many people asked us to link the accounts opened under the financial inclusion programme to link with their monthly pensions which was one of the many services needed by the consumer.

BC Model and ways to improve it

Launched in January 2006, Business Correspondent (BC) initiative in India, a regulator-led effort to address the lack of convenient savings services for low income people was a major reform for connecting the unprivileged. The step taken was to aid the financial inclusion in India. Recently to boost the efforts put in for Financial Inclusion, RBI has agreed to permit interoperability of business correspondents (BCs), aimed at helping customers in rural areas access banking services such as cash deposits, withdrawals etc. Interoperability will be primarily aimed at no-frills accounts. With the implementation of this scheme - It will be like customers going to an ATM of another bank.

Stakeholders involved in BC Model

1. Banks: Banks are interested in BC relationships so as to reach the unbanked, generate additional deposits, and sell other banking services. 2. BCs: They are either provided fixed remuneration from Banks or Service providers subjected to the contracts or they earn commissions from the enrolment of clients, transactions and deposits. 3. Technology Partners: They act as interface between the correspondent and the bank responsible for providing technological solutions such as the authentication device and client cards. E.g. Integra

Typical Delivery Model

1. Clients are enrolled by the BC after a thorough verification of the documents. Some banks charge enrolment fees and some charges nothing (ICICI Bank charges Rs.200 per client, while SBI charges nothing). 13


2. A smart card containing information about the client and the transactions is issued to the clients. 3. All transactions are conducted at the BCs office and at the end of the day; the BC settles its account with the bank. The BC has to deposit money, if deposits are greater than collections. Otherwise, the bank deposits the difference to the BCs account on the next day.

The Insight:
Banks want to use them to extend banking into villages. The government wants to use them to deliver welfare payments. The confidence being reposed in the BC model is a bit of premature thinking at this point of time. What we came to know while travelling down to field is that the model is still struggling. Given the low fees, villagers do not want to become BCs. Those seeing other advantages in becoming a BC, like the village sarpanch seeking to reinforce his hegemony over the village are signing up. Today, the government finds BCs attractive because it thinks biometric verification will severely reduce corruption. Proposing NREGA and Dayanand Rojgar Yojna compensation routed via BCs isnt the full proof plan. Even if the payment is made through the BC, the employment records can still be created the people in power holding BCs position, sarpanch. Corruption will not vanish entirely.

The finance ministry is now talking of ultra-small branches in villages which bank staff will visit once a week. And the RBI is thinking of a way to get banks to oversee BC agents, and to use BC companies purely as technology service providers. Lets hope it may serve the purpose and help the needy ones.

Key Growth Impediments

Policy level 1. Operational Limit: One of the major setbacks for the model has been the operational limit set by RBI i.e. 5 km for urban areas and 15 km for rural areas. Recently being relaxed marginally to 10 km and 30 km respectively but still remains a significant limitation. 14


2. No Fees: Another serious challenge to the BC model has been the prohibition of charging fees to the end user, which has made the development of a viable business model extremely challenging. As a result, it appears that many banks are offering No Frills accounts through the BC model as part of their CSR in response to RBIs pressure to propagate financial inclusion. The current model creates incentives for both banks and BCs to open No Frills accounts to report to the RBI and to gain the account opening fees from the bank respectively and then to let the accounts lapse into dormant state.

Operational level 1. Processing Time: It often takes almost 2-3 months to either activate the account or deliver activated cards for many of the clients - unsurprisingly, many accounts go dormant as a result. 2. Account opening fees: Clients are apprehensive about the account opening fees charged by few banks. Public sector banks such as SBI, Union Bank of India do not charge any fee for opening a zero balance account. Generally in banks like corporation bank A/c can be opened with an initial deposit of Rs 10/- and will provide the account holder the basic banking facilities. No penalty is levied even if the balance in the account drops below Rs. 10. Clients should be made aware of this very fact. 3. Deposits: Some BCs do not allow any other than the account holder to deposit. As for every transaction they need biometric identification of the account holder. It is impractical to expect clients to come to the branch every time they want to deposit. 4. Less Incentive: In order to keep BCs motivated; remunerations should be adequate enough as they are the main connectors of Bank with the rural people.



1. Officially launching the Financial Inclusion programme in the identified villages so that the awareness as well as the know-how of the functioning of this service increases. 2. Taking necessary steps to rectify and fix the technical glitches encountered during operation of the device. 3. Conduct training programmes for BCs so that they are fully aware of how the operations are to be carried out and are also informed about the new changes incorporated into the programme on a periodic basis. 4. There should be a follow up by the technology service provider on a regular basis and dedicated personnel are appointed to provide technical support to the BCs. 5. Regular checks should be conducted by the Bank in the villages and take feedback from villagers availing this scheme so that there is proper delivery of service to the end user and no deviation from the main objective of Financial Inclusion. 6. Pay to BCs should be fixed on higher side as this has been found one of the key reasons why there is less dedication from BCs side. There should be an incentive linked pay to BCs from bank also to boost their performance. 7. Various welfare schemes launched by state and central government can be linked through this account so that it becomes easier for them to operate from a single account and simultaneously manage their savings. 8. A simplified application form and relaxation in KYC (Know your Consumers) norms may help in popularising the financial inclusion programme.

Recommended profile for BCs:

The BCs should ideally have profiles which make it easier for them to interact with the villagers. The BC could be a cooperative society member, shopkeeper who is quite famous among the villagers or any other person directly involved with a significant amount of people in the village. BCs could be provided with additional incentive in form of commission on opening of accounts, which is lacking in the present system. Preferably, a women BC would be more suitable for such jobs as psychologically people are more receptive to women than men. Moreover, they are easily available in form of housewives while men are mostly in jobs.



Recommendation for Technology provider Integra:

Instead of providing BCs through Integra, this job should be done by Bank itself. Prior to appointment of any BC, the Bank can ask for a market research for 4-5 probable candidates and their effectiveness in carrying out the activity. The technical provider should be given the sole responsibility of technical aspect and there should be a clause included in the agreement for service. Any technical issue should be resolved within 24 working hours. Provisions like these are missing in the current model and should be dealt strictly if the model is to be successful. Integra should also be made responsible for after sales service.



Experience to date suggests that BC operations in its current shape might be viable only in a longer term perspective. Also, the real issue is to how to convert clients with zero-balance accounts and low-balance accounts into higher balance users as long as they face the problem of 2-3 month activation lags.

This model may be viable in a shorter run, if: 1. Banks/BCs are permitted to charge small scale fees for the services they provide (there is broad consensus that the poor would be happy to pay such fees for a quality savings service) 2. BC is taken up as one of the few activities by the correspondent with optimal costsharing arrangement among different business activities and the BC starts crossselling other financial products which add to the BCs income by providing commissions. 3. Banks/BCs conduct research to understand the real needs and aspirations of the poor and tailor products to respond to these. 4. Added to these the BCs should be trained to handle the basic operational issues and also the banks can think of using core banking solutions to provide better services to the clients belonging to lower end of the spectrum.



Picture Gallery



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