Exploring the Nature, Scope and Feasibility of Existing
Technological Infrastructure of India's National e-Governance
Plan's Customer Service Scheme Towards Converting In-cash
Transactions into Cashless Transactions
“KIOSK BANKING”
Parul Agarwal
Amulya K Champatiray
IFMR Research, Chennai, India
Agenda
• Background
• Model under study
• Motivation
• Research questions
• Methodology and sample
• Preliminary observations
• Steps Ahead & Further Research Questions
Introduction
IMTFI's Fifth Annual Conference for Funded Researchers, University of
California, Irvine
Five researchers from IFMR, Amulya Champatiray, Deepti Kc, Lakshmi Kumar, Mudita
Tiwari and Parul Agarwal attended the conference organized by Institute for Money,
Technology and Financial Inclusion (IMTFI) at University of California-Irvine on Dec 4-6,
2013. This conference brought together the institute's fifth-year award recipients who
presented their preliminary findings. Deepti Kc and Mudita Tiwari presented their findings
on social, cultural, and commercial factors that influence the decision of using cash
versus electronic transactions amongst the privately led enterprises in Dharavi, and
discussed the scope for the mobile or electronic payment systems. Lakshi Kumar
presented her findings on the privacy risks that the current mobile money framework in
India accounts for. Amulya Champatiray and Parul Agarwal presented the findings of their
study that focused on exploring the nature, scope and feasibility of existing technological
infrastructure of India’s National e-Governance Plan’s Customer Service Centre scheme
towards converting in-cash transactions into cashless transactions.
Background
• India is the 7th largest country by area and 2nd most populous country with a
diverse socio-economic culture. It is an emerging economy – 10th largest
economies by GDP and 3rd by PPP.
30% of population lives below poverty line
69% of population lives in rural India with poor
infrastructure, services and employment
opportunities
More than 60% of population is unbanked with
only 7 branches per 100,000 adults in rural India
Background
•
Recently, the Government of India has increased efforts and investment into financial
inclusion.
- Revisions in SHG-BLP (SHG 2), RBI’s financial inclusion drive, BC and BF,
New banking licence, Women’s bank, NREGA, NRLM, NHBY etc.
- The National e-Governance Plan (NeGP) to enable a
greater accessibility
of all government, social and private sector services to the citizens
affordable cost.
at
an
Model under study
Model works on PPP Framework
Motivation
Sector based factors
•
Emphasis on “branchless banking” –
•
Massive web-enabled infrastructure:
critical inputs are essential to make
over 100,000 internet enabled kiosks
relevant corrective and replication
across 600,000 villages.
measures for a greater impact.
•
Model based factors
•
Prior study conducted by CMF-IFMR
found that the KIOSK model in rural
Trust because of authentic system of
government service delivery.
•
Innovative
approach:
motivating
areas is not financially viable if it just
enough to see if the model is
offers financial services.
promising enough to be scaled-up
towards creating an impact on the
financial behaviour of poor.
Research Questions
•
To study the kiosk banking model, set up under NeGP, its financial
viability and sustainability and to identify the motivation and aspirations
of VLEs.
•
To understand the beneficiaries’ perspective regarding the significance of
this kind of banking model, their acceptability of electronic/ web-based
financial transactions and their further expectations.
•
To explore the potential of the well-equipped and established physical
infrastructure of CSCs in converting villages’ major in-cash transactions
(especially in case of agriculture) into cashless transactions.
Sample and Methodology
•
Partnering with AISECT, the following sample in Sagar district, Madhya
Pradesh was drawn for the study:
– 30 VLEs/CSCs were selected of which 10 were randomly selected for further
exploration.
1 CSC/ VLE
30 Beneficiaries
6 Farmers
Agri Input Retailers
– 5 SBI Bank Managers were also interviewed
Preliminary Observations
• Characteristics of CSCs and VLEs
• Characteristics of Clients
• Factors that motivate VLEs
• Branding and Marketing
• Services and Footfall
• Clients’ Experience with CSC
• Insights form Bankers
• SWOT Analysis
• Scope of extending the model
Characteristics of CSCs and VLEs
Average Age
35 years old
Education
10th standard and above
Existing business
60% (avg. income INR 10,000 PM)
Investment (capital)
Own savings 71% and
29% got support from family
Average monthly income from CSC
INR 15,500
Average number of villages covered
13
Average Client outreach (overall)
10,000
Average Client outreach for financial services
8,000
Characteristics of Clients
Age group
School going kids to old age people
Male and female proportion of client
36% female and rest are male clients
Financial Decision maker
62% of respondents
Education
>80% have acquired some level of education
Occupation
36% Non-agri labour, 19% petty business, 12% each
students and domestic services, 7% salaried and 2% old
& retired
Average savings bank account per hh
2
Savings balance per household
INR 2300 (median)
Most preferred source of savings
34% household save in formal institutions
Source of information about CSC
Villagers / friends
Factors that motivate VLEs
Motivation
Increase in monthly income
57%
Add value to existing business
Employment
43%
15%
• About 90% of VLEs believe that their social status has improved
due to their association with CSC
• Further, 87% believe that it has strengthened their social
networks.
• Learning from other VLEs helps them address the operational
issues and make them feel informed and connected.
Branding and Marketing
•
87% of VLEs do their own marketing by using – sign boards, pamphlets, wall
posters, announcements, word of mouth, demo in schools
•
On an average, about INR 6,800 was spent by each VLE towards marketing
•
60% VLEs believe that people are aware about their services
•
57% of VLEs plan to adopt a new marketing strategy in future in efforts to
increase their number of clients.
Services and Footfall: Financial
Particulars
Opening Basic savings account
Opening RD/FD account
Savings deposit in basic savings account
Cash deposit in FD/RD account
Withdrawing cash from basic savings account
Transferring money from savings to FD/RD
account
Loan Repayment: transfer of money from
savings account
Life Insurance
Remittance Services
Bill Payments
Receiving government payments (pension, etc.)
Producing statements
Average Monthly Transaction #
450
76
139
30
1156
13
14
8
107 (37% in other bank account)
47
275
300
Services and Footfall: Non-financial
Services
Average Transaction #
Government to Citizen (G2C) Services
Utility /Telephone Bills
840
Employment exchange
373
Business to Citizen (B2C) Services
Digital Photos
837
Desktop printing
847
Forms downloads
427
Photocopy
614
Citizen to Citizen (C2C) Services (research
data, data entry services)
23
Commerce/Online Service (rail ticket,
astrology, matrimonial, shopping, etc.)
30
Telemedicine Primary Healthcare
10
Services and Footfall: Revenue Generating Products
Top 5 Financial Services – Usage &
Revenue
Withdrawing cash from a savings account
Top 5 Non- Financial Services – Usage &
Revenue
Photocopy
Savings deposit in a savings account
Digital photographs
Opening a savings account
Printing
Cash deposit in FD/RD account
Downloading forms
Opening FD/RD account
Bill Payments
Services and Footfall: Usefulness of Services
Source used by clients prior to CSC
Source
Savings
Withdrawal
Remittance
Didn’t do any
transaction
41.2%
45.2%
50%
Used a formal bank
35.3%
32.3%
50%
Other
23.5%
22.6%
-
Clients’ experience with CSC
Clients’ level of
convenience in using
Kiosk
66.7%
31.0%
2.4%
Easy
Moderate
Difficult
• Most attractive feature to
clients: withdrawing money
• Cost incurred to open a bank
account includes Rs. 5 on
transportation and Rs. 13 on
documentation etc.
• It takes around a week to get an
account opened
• 91% of clients are satisfied with
the services provided by CSC
• Location of the CSC is a clear
advantage
Clients’ experience with CSC: in comparison
Advantages of CSC (over other service providers)
Financial
Services
Non - Financial
Services
Location/proximity to village
88.10%
59.52%
Prices of services
64.29%
52.38%
Range of services
33.33%
34.15%
Quality of service
61.90%
42.86%
Advantages
Insights from Bankers
Objective: Target small clients who otherwise cannot access banking services,
increase SB accounts, loan recovery, sourcing new clients
Challenges:
• Trust building among prospect clients
• Technology – knowledge and comfort
• Client KYC
• Larger Government payments
• Political interpretations
• Monopoly and discrimination at VLE level
Future Plans:
• Transfer of 100% SB account to Kiosk (decongestion to give more assistance
to high-end clients)
• Provide more services like General insurance and loan services
• Target small client 45,000 - 60,000 in next 2-3 years
SWOT Analysis
Strengths
Weaknesses
• Bank’s Policy
• Technical glitches
• Multi-service Approach
• Electricity
• Training
• Space & management
• Location
Opportunities
Threats
• Scale-up
• Competition
• Replication
• Perceptions
• Innovation
• Political environment
Scope of extending the model: Current Status
Major source of livelihoods
Agriculture
Average percentage of households that depend
75% to 95%
on agriculture
Average total cultivation land in the village
1500 acres to 2200 Acres
Percentage of irrigated land
75% and above
Average land holding per farmer household
3 acres to 8 acres
Common retailers for purchase of inputs
5-10 KM radius
Most popular selling points
5-10 KM radius
Average Cash or credit transactions for input
purchase
Average in- Cash transactions for selling
output
Annual Business to each Retailer
INR 10,090, 909/ village / year
INR 12,272, 727/ village / year
INR 400,000 to 600,000
Scope of extending the model: Proposition
• A model that provides either the first or a combination of the
following:
- Scope to place (or receive) the order over phone and
then transfer (or receive) money electronically through CSC
- To get (or post) information on quality of produce and price
offered (or demanded) through CSC
• Reactions:
- Farmers are willing to pay for such a service as this will reduce
costs and time for them
- Retailers are willing to pay for the service as this will get them
more customers and will lead to a healthy competition
- Bankers believe that this model has potential but needs to be
well thought through before implementation
Steps ahead and further research questions
Over the next phase of data collection (in next two weeks), researchers
intend to study the following in addition to the basic research questions:
• Does a child’s scholarship account motivate parents to get themselves
into the formal banking system?
• Does owning a savings account at an early age inculcate the habit of
saving and principle of money management among kids and youth?
• How can the model be extended and evolved to provide customized
services to people engaged in various livelihood based transactions?
Thank you
For further questions and discussion please write to the researchers at:
parul.agarwal@ifmr.ac.in
amulyakrishna.champatiray@ifmr.ac.in