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Financial Inclusion and MGNREGA payment initiative in Jharkhand Ajoy Kr. Singh , Secretary Sports & MGNREGA Commissioner

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Presentation Format <ul><li>Introduction </li></ul><ul><li>Financial Inclusion </li></ul><ul><li>Panchayat Bank: CSC Model </li></ul><ul><li>Opportunities/Challenges </li></ul>

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1. Introduction <ul><li>MGNREGA: </li></ul><ul><ul><li>100 days of guaranteed employment to registered HH. </li></ul></ul><ul><ul><li>Job within 15 days of filing application. </li></ul></ul><ul><ul><li>Unemployment allowance if job not provided within time. </li></ul></ul><ul><ul><li>Payment within 15 days of job. </li></ul></ul><ul><ul><li>Payment through Bank/Post office. </li></ul></ul><ul><li>Population 3 crores (approx.) </li></ul><ul><li>villages 36,000, Panchayats 4423 </li></ul><ul><li>Bank branches only 1500 </li></ul><ul><ul><li>One branch for 20,000 people, mostly rural (on Avg.) </li></ul></ul><ul><li>MGNREGA accounts : 30 lakh beneficiaries; 75% accounts with Post offices. </li></ul><ul><li>Complex and time taking Wage payment </li></ul>

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<ul><li>12 Blocks Selected for total FI in Pilot mode for UIDAI Project </li></ul><ul><li>One block one bank approach adopted for total FI. . </li></ul><ul><li>Scheme extended to entire state </li></ul><ul><li>EOI was floated in consultation with RBI. </li></ul><ul><li>Excellent response from banks. </li></ul><ul><li>All 259 blocks already allocated to 9 different banks. </li></ul><ul><li>Alignment of FI and Enrolment process </li></ul><ul><li>2% transaction fee to be given only in pilot Blocks. </li></ul>2. Financial Inclusion

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<ul><li>Conditions imposed on Banks : </li></ul><ul><ul><li>For 100% FI for cash transfer under MGNREGA as well as other social sector programs such as old age pension, etc. </li></ul></ul><ul><ul><li>Banks to open Aadhaar enabled or otherwise Bank Accounts. </li></ul></ul><ul><ul><li>Condition to establish Panchayat banks either through CSC or any other BC </li></ul></ul><ul><li>All account of Blocks/Panchayats and beneficiaries in a Block will be with one Bank. </li></ul><ul><ul><li>No financial instruments </li></ul></ul><ul><ul><li>No transaction time </li></ul></ul><ul><ul><li>No fund/cash transfer from one bank to other Bank/PO </li></ul></ul>

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Financial Inclusion <ul><li>Number of Enrolments: 23,34,715 </li></ul><ul><li>Number of Aadhaars: 8.12 Lakhs </li></ul><ul><li>Number of Accounts opened: 8,05,000 </li></ul><ul><li>Plan to include approximately 1 crore of bank accounts by the end of this Financial Year </li></ul>

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Financial Inclusion : Progress <ul><li>Banks directly or </li></ul><ul><li>through BC </li></ul><ul><li>Based only on Aadhaar </li></ul><ul><li>FI through CSC </li></ul>Sl. No. Bank No. of Block Number of Accounts 1. ICICI Bank 27 147000 2. State Bank of India 105 6200 3. Central Bank of India 5 5100 4. Union Bank of India 19 57000 5. Bank of India 72 166000 6. Allahabad Bank 17 405000 7. AXIS Bank 3 4000 8. Jharkhand Gramin Bank 7 14700 9 United Bank 4 NIL Total 8 259 8,05,000

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Flow Diagram for Opening of Aadhaar enabled bank Accounts for MGNREGA and BPL beneficiaries

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Financial Inclusion through CSC <ul><li>Agreement executed between SBI and SCAs (UTL and AID) for 18 out of 24 districts. </li></ul><ul><li>Execution of agreements between other banks and SCA in progress </li></ul><ul><li>FI in online mode from Panchayat Bank </li></ul><ul><ul><li>Total Accounts opened is 4962 </li></ul></ul><ul><ul><li>Total Accounts Pending – 588 </li></ul></ul><ul><ul><li>Total Accounts Active – 4374 </li></ul></ul>

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3. Panchayat Bank : CSC Model <ul><li>Need to have increase in the number of banking outlet close to beneficiary. </li></ul><ul><li>Banking outlet at the Panchayat level (Panchayat Bank) either through CSC or any other agency as BC of the Bank. </li></ul><ul><li>Approx. 4500 Panchayat Banks in entire State. </li></ul><ul><li>Pilot Panchayat Banks working in approx 50 Panchayats </li></ul><ul><li>UTL using SBI Kiosk Software of bank </li></ul><ul><li>Total Amount distributed to MGNREGA beneficiaries – Rs. 15,01,452 </li></ul>

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Biometric Authentication based payment <ul><li>STEPS: </li></ul><ul><ul><li>Authentication of VLEs </li></ul></ul><ul><ul><li>Login by VLE </li></ul></ul><ul><ul><li>Biometric authentication of </li></ul></ul><ul><ul><li>beneficiary </li></ul></ul><ul><ul><li>Login of Beneficiary’s Account </li></ul></ul><ul><ul><li>Transaction </li></ul></ul><ul><ul><li>Biometric authentication of </li></ul></ul><ul><ul><li>beneficiary </li></ul></ul><ul><ul><li>Closure of account </li></ul></ul><ul><ul><li>Print out of receipt </li></ul></ul>

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Biometric Authentication based Payment Model Only stage of physical cash movement BANK SERVER CIDR SERVER (UIDAI) Auth. Request With Biometrics Response

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Transition to Aadhaar enabled payments <ul><ul><li>- Change in agreement of BC and Bank </li></ul></ul><ul><ul><li>Change in Software of Panchayat Bank </li></ul></ul><ul><ul><li>Transfer of cash on the basis of Aadhaar </li></ul></ul><ul><ul><li>Authentication from UID server </li></ul></ul>

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4. Opportunities <ul><li>Shifting of CSC in Panchayat building ensures visibility </li></ul><ul><li>Better coordination with government offices </li></ul><ul><li>Advantage of Space and Power to CSC </li></ul><ul><li>Banking services in each panchayat </li></ul><ul><li>All services under one roof </li></ul><ul><li>Other financial services/MGNREGA entry of data in MIS portal </li></ul><ul><li>Supplementary income to CSC </li></ul><ul><li>A viable business model. </li></ul>

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Challenges <ul><li>Connectivity at Panchayat level : VSAT </li></ul><ul><li>Availability of Power : Solar Power </li></ul><ul><li>SCA’s </li></ul><ul><ul><li>Lack of expertise </li></ul></ul><ul><ul><li>Lack of availability of Software </li></ul></ul><ul><ul><li>Capacity constraints </li></ul></ul><ul><li>Training of VLEs </li></ul><ul><li>Execution of agreement between Banks and SCA </li></ul><ul><li>To confirm to Aadhaar enabled banking transactions (interoperability) </li></ul>

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Thank you!