Nischay
Nischay
Nischay
NISCHAY
A synopsis on Inclusive Banking Thro’ Business
Correspondents (Payments Banks)
2nd Floor, Speed Post Centre Bhai Vir Singh Marg, New Delhi -110001
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Table of Contents Page No.
It was felt that the branch banking and electronic banking may not be appropriate models to
reach the excluded people as financial inclusion involves financial education, counselling and
building up of close relationship with people. In this background and in order to take banking
services to the people living in unbanked and under banked areas, the Business
Correspondent/Business facilitation (BC/BF) Model was introduced. The person or institution
company appointed as BC/BF will function as an extend arm of the bank branch in the area.
The individual appointed by the bank or a BC company is known as Business Correspondent
Agent (BCA). As a result of this arrangement, the targeted population can access various
financial services and financial education from the banks through these agents.
A bank accepts deposits from the public in the form of savings, Current and/ or Term Deposits.
Banks can be either scheduled or non-scheduled. Banks which are listed in the second schedule
of the Reserve Bank of India are known as scheduled banks. These banks are further classified
as:
Public Sector Banks(PSBs) These banks are characterized by majority ownership (51% or more
share capital) by the Government of India. About 72% of the banking business in India is
performed through these banks.
Regional Rural Banks (RRBs) have been established with a focus on rural development. These
are also scheduled banks sponsored by public sector banks. Their ownership capital is provided
jointly by Central Government (50%), concerned State Government (15%) and the sponsoring
(35%). In order to ensure better viability of these RRBs, sponsor banks have started merging
their RRBs at State level. After the merger, the number has been reduced from 196 to 56 as on
31st March, 2017.
Traditional Functions
i. Acceptance of Deposits: Current accounts and savings accounts are also known as demand
deposits. Term deposits could be in the form of fixed deposits, recurring/ cumulative deposits,
monthly income deposits, etc. Term deposits constitute the largest portion of bank’s funds.
ii. Loans and Advances: Banks lend in the form of Cash Credits, Overdrafts, Demand Loans and
Term Loans. Based on the borrower profile, loans can be classified as Corporate Loans, SME
advances., Agricultural Loans, retail Loans, Foreign Currency Loans, Educational Loans, Vehicle
Loans etc. A loan account with security is known as secured loan whereas a loan without
security is known as clean loan (clean advance). Loans and advances which remain overdue for
more than a stipulated period is known as ‘non-performing assets’ (NPAs).
iii. Remittance services: Banks charge appropriate fee from the remitting person for the service
rendered. Remittance of funds by banks is fast, safe, secure and cheap as compared to other
modes of funds transfer, like post office money order (which is generally for small sums of
money for personal use), physical transfer of money etc. Information and Communication
Technology (ICT) is playing an important role in financial inclusion efforts.
Reserve Bank of India: The activities of the banking sector are supervised, controlled and
regulated by the Reserve Bank of India. It plays an important role in the monetary and banking
structure of the country. The Reserve Bank of India (RBI) was established on April 1, 1935 as
the central bank of the country. It acts as the note issuing authority, banker’s bank and banker
NABARD: The Committee to Review Arrangements for Institutional Credit for Agriculture and
Rural Development (CRAFICARD) under the Chairmanship of Shri B. Siva Raman recommended
the establishment of a separate bank at the national level under the umbrella of RBI to be
known as National Bank for Agriculture and Rural Development (NABARD) as a refinancing
agency for the entire rural credit system. NABARD came into existence on 12 July 1982 by
transferring the agricultural credit functions of RBI and refinance functions of the then
Agricultural Refinance and Development Corporation (ARDC). More than 50% of the rural
credit is disbursed by the Co-operative Banks and Regional Rural Banks. NABARD is responsible
for regulating and supervising the functions of co-operative banks and RRBs.
Self-Assessment
2. IDBI is a
CHAPTER 2
VARIOUS DEPOSIT SCHEMES AND OTHER SERVICES
Types of Deposits
Demand Deposits
i. Current Accounts: The main feature of currents accounts are:
There are no restrictions on the number and amount of withdrawals deposits.
Cheque book facility is provided to each current account holder. Withdrawals are permitted
by cheques. There is no restriction on the number of cheques that can be transacted in a day.
Balances in the current accounts do not earn any interest.
Customers are allowed overdraft facility. Overdraft is a facility whereby banks honor cheques
drawn by current account customers even when the balance in the account is less than the
amount of the cheques. Banks charge an agreed rate of interest on such over drafts.
ii. Savings Bank Accounts: Banks pay interest on these accounts with a view to encouraging
saving habit in the community. Savings account can be opened by individuals, guardians (on
behalf of their minor children/words), minors of the age of 10 years and above, trusts, HUF,
etc. The main features of Savings bank accounts are as follows:
Banks stipulate certain restrictions on the number of withdrawals per month/ quarter,
amount of withdrawal per day, minimum balance to be maintained in the account on all days,
etc. and levy fee/ penalty for violations of these rules. These rules are different for different
banks.
Banks pay interest on the daily balance maintained in the account at the prescribed rate.
Banks are free to decide interest rate on Savings Bank Account.
No overdraft (payment in excess of the credit balance) is allowed in a savings bank account.
Under electronic banking, a customer can access the account through interest by using a
customer ID number and password assigned to him/her by the bank.
Insurance of Bank deposits by Deposit Insurance and Credit Guarantee Corporation (DICGC)
– Each depositor in a bank is insured upto a maximum of Rs. 5,00,000 (Rs. Five Lakh) for both
principal and interest amount held by him in the same capacity and same right. No premium
is charged from customer for the purpose. Individual Bank who are registered with DICGC
bears the insurance premium cost.
REMITTANCES
A. Banker’s Drafts: A banker’s draft (or demand draft) is a payment order issued by one branch
of a bank upon other branch, instructing the drawee branch to pay the specified sum of money
to the specified person. A demand draft is always drawn, payable to order. A demand draft
resembles a bill of exchange, the only difference being that in the former, the drawer (bank)
and the drawee (bank) are same. A demand draft is a negotiable instrument payable to a
certain person or to the order thereof, drawn by one branch of a bank on another branch of
the same bank, or specific branch of another specific bank with which the drawer bank has
draft-drawing agency arrangements.
iii. Remittance through NFFT: The NEFT (National Electronic Fund Transfer) service helps in the
seamless transfer of funds from one branch to another without any delays or procedural
hassles. In NEFT, there are clearing settlement batches and the return time allowed is 24
hours.
iv. Remittance through mobile phones as well as Internet Banking and ATM:
Immediate Payment System (IMPS): Immediate Payment Service (IMPS) was launched by
NPCI on 22nd November, 2010. It offers an instant, 24*7, interbank electronic fund transfer
service through mobile phones as well as internet banking and ATMs. In the process of
remittances across the bank there are four stakeholders I.e. (1) Remitter (Sender), (2)
Beneficiary (Receiver), (3) Banks and (4) National Financial Switch – NPCI.
For registration the Remitter must register for mobile banking and get Mobile Money
Identifier (MMID) and Mobile Banking PIN (MPIN) for initiation of a transaction. MMID is a 7-
digit number, to be issued by the bank to the customer upon registration and the Beneficiary
Must Register his/her mobile number with the bank account and get MMID.
National Unified USSD Platform (NUUP): Banking customers can use this service by dialing
*99#, a “Common number across all Telecom Service Provides, (TSPs)”, on their mobile and
transaction through an interactive menu displayed on the mobile screen. A notable inclusion
in the NUUP service is a new addition in the form of Query Service on Aadhaar Mapper
(QSAM). Under this feature a user can come to know about his/her AADHAAR seeding status
Self-Assessment
CHAPTER 3
ACCOUNT OPENING, ON-BOARDING PROCESS, KYC MECHANISM AND OPERATIONS
One of the main objectives of KYC procedure is to prevent possible misuse of the banking
system for money laundering and financing of terrorist activities. RBI has stipulated that banks
should show strict adherence to ‘KYC’ guidelines and monitoring of cash transaction based on
prescribed norms (above specified amounts).
Documents to be obtained:
A) Accounts of individuals
For proof of identity:
1) Passport; 2) PAN card; 3) Voter’s Identity Card; 4) Driving License; 5) job; 6) The letter issued
by the Unique Identification Authority of India (UIDAI) containing details of name, address and
Aadhaar number; 7) Identity card (subject to the bank’s satisfaction); 8) Letter from a
recognized public authority or public servant verifying the identity and residence of the
customer to the satisfaction of bank.
Banks should accept e-Aadhaar downloaded from the website of the Unique Identification
Authority of India (UIDAI) as an officially valid document.
Utility bill which is not more than two months old of any service provider electricity, telephone,
postpaid mobile phone, piped gas, water bill for the limited purpose of proof of address are
deemed to be Officially Valid Documents (OVDs) under ‘simplified measures’.
Those persons who do not have any of the ‘officially valid documents’ can open ‘small
accounts’ with banks. A ‘small account’ can be opened on the basis of a self-attested
photograph and putting her/his signature or thumb print in the presence of an official of the
bank. Such accounts have limitations regarding the aggregate credits (not more than Rs. one
lakh in a year), aggregate withdrawals (not more than Rs. ten thousand in a month) and
balance in the accounts (not more than Rs. fifty thousand at any point of time).
If an existing KYC complaint customer of a bank desires to open another account in the same
bank, there should be no need for submission of fresh proof of identity and/or proof of address
for the purpose.
While imposing ‘partial freezing’, banks are advised to ensure that the option of ‘partial
freezing’ is exercised after giving due notice of three months initially to the customers to
comply with KYC requirement and followed by a reminder for further period of three months.
If the accounts are still KYC non-compliment after six months of imposing initial ‘partial
freezing’ banks may render them in-operative.
B) Accounts of companies
Documents to be obtained: 1) Certificate of incorporation and Memorandum and Articles of
Association; 2) Resolution of the Board of Directors to open an account and identification of
those who have authority to operate the account; 3) Power of Attorney granted to its managers,
officers or employees to transact business on its behalf; 4) Copy of PAN allotment letter 5) Copy
of the telephone bill.
E) Accounts of Proprietorship Concerns: Any two of the following documents would suffice.
Registration certificate (in the case if a registered concern)
Certificate/license issued by the Municipal authorities under Shop and Establishment Act.
Sales and income tax return
CST/VAT certificate
Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax
authorities
License issued by the Registering authority like Certificate of Practice issued by Institute of
Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company
Secretaries of India, India Medical Council, Food and Drug Control Authorities,
registration/licensing document issued in the name of the proprietary concern by the Central
Government or State Government Authority/Department, etc.
The complete Income Tax return (not just the acknowledgment) in the name of the sole
proprietor where the firm’s income is reflected, duly authenticated/acknowledge by the
Income Tax Authorities.
Utility bills such as electricity, water, and landline telephone bills in the name of the
proprietary concern.
Specimen signature of the customer is obtained on the account opening form in the presence
of the bank staff and it is attested by an authorized bank officer in the form itself. A customer
is recognized mainly by his/her signature on the cheques vouchers and these are compared
with the specimen signature on record to verify the genuineness of the customer’s signature.
In respect of credit/debit cards and ATM cards, customers are given specific PIN numbers by
the banks.
Banks are required to make available all printed material used by retail customers including
account opening forms. Pay-in-slips, pass-books, etc., in trilingual form i.e., English, Hindi and
the concerned Regional Language.
Self-Assessment
4. Objectives of KYC
a) To ensure appropriate customer identification
b) To monitor transaction of suspicious nature
c) If loan given, it would not be a NPA
d) To create a data base of customers
CHAPTER 4
ACCOUTING, FINANCE AND OPERATIONS
When money is advanced by a bank, the borrower usually pays a price in consideration of the
loan to the banks, till it is repaid (to the bank). This price is called ‘Interest”. Similarly, a bank
pays interest at agreed rates on deposits accepted by it.
Question: If Rs. 1 lac is the money borrowed for 12 months and the ROI is 12% p.a., then
what would be the Interest paid by the borrower to the lender?
By applying the above formula, let us calculated the amount of interest payable in the above
illustration.
A=P (1+r/n)^nt
Where:
P = The principal (original amount)
A = the amount on maturity
r = the rate (expressed as fraction)
n = number of times per year that interest is compounded
t = number of years of the loan/ deposit
Question: You deposit Rs. 10,000 with a bank for one year at 6% interest p.a. The Bank Pays
monthly compounded interest which is reinvested in the account. What amount would you
get on maturity of your deposit?
Solution:
A= Amount on maturity
P= Rs. 10000
R= 0.06
N= no. of times a year that interest is compounded=12
T= no. of years of the deposit
=10000 (1 + 0.005)^12
=10000 (1.005)^12
= Rs.10000 (1.06167)
= Rs. 10616.77 say Rs. 10617
Self-Assessment
1. If Rs. 1 lakh is the money borrowed for 12 months and the ROI is 12% p.a. simple, when is
the interest paid by the borrower?
a) Rs. 10000
b) Rs. 24000
c) Rs. 20000
d) Rs. 12000
CHAPTER 5
The banks will inform customers where to find details of procedures for handling complaints
fairly and quickly. This information is generally made available at a prominent place on the
notice board of branch. If the customer complaint is received in writing, the bank will
endeavor to send an acknowledgement a response within a week. If customer complaint in
Customer’s Day is observed on 15th of every month. On this day branch in-charge will be
available at the branch between 3 p.m. and 5 p.m. to meet customers without any prior
appointment.
Customer Service Committee meetings is held every month at all Branches, Regional Offices.
The sole task of the Committee is to find out ways and means to render service to the
satisfaction of the Customers.
Nodal officer, other designated officials to handle complaints and grievances and mandatory
display requirements: The banks have made it mandatory to display the following at branches
for the benefit of customers:-
1) Details on appropriate arrangements made for receiving complaints and suggestions
2) The name, address and contact number of Nodal Officer
3) Contact details of Banking Ombudsman of the area
4) Details of Code of Bank’s commitments to customers/Fair Practice Code.
Within 30 days of lodging a complaint with the bank, if customer does not get a satisfactory
response from the bank and if customer wishes to pursue other avenues for redressal of
grievances, customer may approach Banking Ombudsman appointed by Reserve Bank of India
under Banking Ombudsman Scheme, 2006.
Self-Assessment
1. _____________is responsible for resolution of grievances at the branch level.
a) BC Agent
b) Designated Counter Clerk
c) Sub-Staff
d) Branch Manager
a) Banking Ombudsman
b) Grievance Redressal Procedure
c) Consumer Courts
d) Civil Courts
5. If not satisfied by the decision/award, either bank or customer can appeal to the Deputy
Governor, RBI and the Appellate Authority within days from the date of receipt of the
Award.
a) 45
b) 30
c) 15
d) 20
CHAPTER 6
OVERVIEW OF THE FINANCIAL MARKET
Commercial Banks: Commercial banks include public sector banks, foreign banks, and private
sector banks. Acceptance of deposits from the public for the purpose of lending or investment
is the main area of activity.
Primary Dealers (PDs): PDs are primary dealers in government securities and deal both in
primary and secondary markets. Their basic responsibility is to provide markets for
government securities and strengthen government securities market.
Financial Institutions (FIs): FIs are development financial institutions which provide long-term
funds for industry and agriculture. All these institutions are under off-sire and on-site
surveillance of Central Banking Authority. FIs raise their resources through long-term bonds
from financial system and borrowings from international financial institutions.
Co-operative Banks: These are allowed to raise deposits and give advances from and to public,
Urban Co-operative Banks are controlled by State governments and RBI, while other co-
operative banks are controlled by NABARD and State Governments.
Management of Government Debt: Most of the Central Banks manage issue and servicing of
government debt. This involves price discovery, volume to be raised, tenure of debt, and
matching it with over-all cash management of the debt.
Cash Reserve Ratio (CRR): Cash Reserve Ratio (CRR) is the mandatory deposit, to be held by
Banks with monetary authority/ Reserve Bank of India. It is a percentage of their Demand and
Time liabilities. The increase or decrease can be effected by the Central Bank to pump in and
soak liquidity in the banking system.
Statutory Liquidity Ratio (SLR): Statutory Liquidity Ratio (SLR) is the prescribed percentage of
Demand and time liabilities of a bank, to be held in prescribed securities, mostly government
securities.
Self-Assessment
1. Banks need to maintain certain percentage of their Demand and Time liabilities with the
Reserve Bank India compulsorily. This is referred as.
The situation wherein people are not able to access financial products from formal financial
institutions is termed as “Financial Exclusion”. The ‘financially excluded’ section needs to be
educated about the benefits of being a part of the organized financial system. Financial literacy
and product innovation are the needs of the hour if microfinance is to extend its reach, and
the reach and deliver on its goal of financial inclusion in India.
There are 1,25,857 branches of all banks in the country as on 31 st march, 2015 out of which
only 48577 are in the rural areas. Currently, for every 12000 people in India, there is only one
branch of commercial bank to meet their banking needs.
While analyzing the root causes for the above state of affairs, one must recognize the
following:
A major issue in expanding the outreach of the formal banking system is the transaction cost
for banks.
Poor credit discipline in rural loans is another important issue.
Adequacy of manpower in the rural branches is another issue.
Not only do the banks find it difficult to reach the poor in the rural areas, the poor also do not
find it easy to relate to the urban-oriented staff at the rural b ranches.
Often the distance at which the bank’s branches located necessitated customers to incur out-
of-pocket expenses and also to forego their earnings during the days they visited.
The co-operatives are not efficient and financially strong to undertake larger credit
disbursement.
The Reserve Bank of India in its annual policy statement of April 2005 recognized the problem
of financial exclusion and had initiated several steps.
Introduction of basic savings bank deposit account wither with nil or very low balances as well
as charges that make such accounts accessible to vast sections of population.
A simplified general purpose credit card (GCC) facility to be issued by banks without insistence
on collateral or purpose.
Launching self-help group scheme.
Simplified “know your customer (KYC)” norms.
Relaxations in Branch Licensing Policy.
A major technological development in banking sector is the adoption of the Core Banking
Solutions (CBS). CBS is a step towards enhancing, customer convenience through, Anywhere,
Anytime Banking. The adoption of CBS led to various technological products like NEFT, RTGS,
mobile banking, Internet Banking, ATMs, etc. Some of the Technological based products have
made significant changes in the banking outreach to the mases are appended below:
Adopting core banking solution (CBS) by the Banks, including all Regional Rural Banks (RRBs).
A multi-channel branchless approach using handled devices, mobiles, cards, micro-ATMs and
kiosks can be u sed.
Self-Assessment
Answer: The definition of financial inclusion currently in use is the delivery of financial services by
the formal financial system at an affordable cost to vast sections of disadvantaged and low-income
groups.
2. The following are a few of the root causes that prevent banks reaching now to the rural poor.
(State what is incorrect)
3. The Regional Rural Banks are the best fitted to be the vehicle for financial inclusion in rural
areas. (State what is incorrect)
4. The initiatives of Reserve Bank of India towards financial inclusion of the rural poor include.
(State what is incorrect)
a) Introduction of basic ‘no-fills’ savings accounts making them accessible to vast sections of the
rural poor.
5. Intermediaries through who banks reach-out to the rural poor in areas they have no
branches include. (State what is incorrect)
a) Self-Help Groups
b) Non-Government Organizations
c) Debt Recovery Agents
d) Microfinance Institutions
CHAPTER 8
BUSINESS CORRESPONDENT AND BUSINESS FACILITATOR (BC/BF) MODEL: A
VEHICLE FOR FINANCIAL INCLUSION
The services to be provided by BCs include rural credit disbursement, delivery of savings and
insurance products, small value payments and remittances. The BC idea has come from Brazil
where retail vendors, lottery outlets and post offices double as bank branches. It is said that
the Business Correspondent/Business Facilitator will be a friend, philosopher and guide to the
people in the villages served by him/her. A Business Correspondent/Business Facilitator is
normally the one residing and/or located in the area he/she serves.
The following organizations and their members/staff or individuals mentioned below can be
business facilitators.
Non-Government Organizations (NGOs)
Farmers Club
Community Based Organizations (CBOs)
Co-operative Societies
Post Offices
Insurance Agents
Village Knowledge Centers (VKCs)
Agri-clinics and Agri Business Centers
Krishi Vigyan Kendras
KVIC/KVIB units in the area.
IT enabled Rural Outlets of Corporate Entities
Farmers’ Service Societies
Well-functioning Panchayats.
Primary and Secondary School Teachers
Members of NGOs/LBOs
Members of Self Help Groups
Anganwadi/Balwadi workers
Primary Health Centre Staff
Eligible Individuals/entities
Individuals like retired bank employees, retired teachers, retired govt. employees and ex-
servicemen.
Owners of Kirana/Medical/ Fair Price Shops, individual Public Call Officer operators.
Agents of Small Savings Schemes of Govt. Of India/Insurance Companies,
Individuals who own Petrol Pumps.
Authorized functionaries of well Run Self-Help Groups which are linked to banks, any other
individual including those operating Common Service Centers.
NGOs/MFIs set up under societies/Trusts Acts and Section 25 Companies,
Co-operative Societies registered under Mutually Aided Cooperative Societies
Acts/Cooperative Societies Act of States/Multi State Cooperative Societies Act,
Post Offices,
Companies registered under the Companies Act, 1956, with large and wide-spread retail
outlets, excluding NBFCs, and
Non-deposit taking NBFCs (NBFCs-ND)
Such third party intermediaries doing banking business in villages away from the Bank’s
location attract significant reputation, legal and operational risks for banks engaging them to
work as Business Correspondents. To mitigate these risks, banks generally:
a) Specify suitable limits on cash holding by Business Correspondents
b) Specify limits on individual payments and receipts
c) Ensure that the transactions performed by them are accounted for and reflected in the bank’s
books at the end of the day or at least the following working day, and
d) Ensure that all agreements/contracts with the customer shall clearly specify that the bank is
responsible for the acts of commission and omission of the Business Correspondent.
Self-Assessment
1. The scope of the activities to be undertaken by the Business Correspondent will not
include
2. Banks cannot use the services of one of the following as intermediaries under BF/BC
Model
a) NGOs
b) SHGs
c) Village Sarpanch
d) MFIs
Some of the issues/problems faced by customer while using banking technology products are
mentioned below:
The delay in reversing the amount wrongly debited (either due to technology failure or frauds)
to the customer’s a/c.
There are instances wherein short payment is made to the customer by the ATM.
When a customer visit’s an ATM, there are instances wherein the machine in out of order or
out of cash.
Most of the time, customers get only higher domination notes at ATMs and there is also no
facility to exchange the same for smaller denomination notes or coins.
The confidentiality and the secrecy of the customer information in their custody is of
paramount importance. The BC/BF should maintain it completely.
Their access to the customer information should be limited to those areas where the
information is required for performing the outsourced function. Other records should not be
made available to them.
They should be able to isolate and clearly identify the Bank’s customer information,
documents, records and assets to protect the Bank’s confidentiality.
They should be impartial and should not indulge in politics, caste-divisibility irrespective of the
caste, creed or sex.
Self-Assessment
1. BCA provides banking service to the targeted people. Due poor service of BCA, the bank’s
name and image among the tarnished. This is a ___________ risk for the bank.
a) Contractual
a) BCA should maintain the confidentiality and the secrecy of the customer information
b) BCA should indulge in local politics
c) BCA should treat his/her customers differently according to their caste, creed or sex
d) BCA should not do transaction with financially excluded people.
CHAPTER 10
PMJDY, PMJJBY, PMSBY AND APY
To include financially excluded segments of the society into formal financial system with the
Branchless Banking through Agents called Business Correspondent was started by RBI in 2006.
In 2011, the Government of India gave a serious push to the programme by undertaking the
“Swabhimaan” campaign to cover over 74,000 villages, with population more than 2,000 (as
per 2001 census), with banking facilities.
Census, 2011 estimates that only 58.7% of the households have access to banking services.
Pradhan Mantri Jan-Dhan Yojana (PMJDY) was introduced by the Prime Minister on 15 August
2014 and it has set an ambitious target of bringing in more than 7.5 crore un-banked families
into banking system by opening more than 15 crore bank accounts at the rate of two bank
accounts per household. To universalize social security, Government has launched three new
The bank account under PMJDY can be opened in any bank with Zero balance and Joint account
also can be opened. Any individual above the age of 10 years can open BSBDA/PMJDY Account.
Life Insurance Cover Under PMJDY: The person should be a member of the family and should
be in the age group of 18 to 59 (i.e. person should be at least 18 years old, and should not have
turned 60) and meet all other conditions of eligibility like having a bank account etc. In case of
a person having multiple cards/accounts, the benefit will be allowed only under one card i.e.
one person will get a single cover of Rs. 30,000, subject to the eligibility conditions.
RuPay Debit Card: Rupay Debit Card is an indigenous domestic debit card introduced by
National Payment Corporation of India (NPCI). “RuPay”, the word itself has a sense of
nationality in it. RuPay is the coinage of two terms Rupee & Payment.
Eligibility criteria to avail personal Accidental insurance cover on RuPay Debit Card: The Claim
under Personal Accidental Insurance under PMJDY shall be payable if the Rupay Card holder
have performed minimum one successful financial or non-financial customer induced
transaction at any Bank Branch, Bank Mitra, ATM, POS, E-COM etc. within 90 days prior to date
of accident including accident date will be included as eligible transactions under the Rupay
Insurance Program. Claim intimation should be made within 90 days from the date of accident.
All supporting documents relating to the claim must be submitted within 60 days from the
Electronically Known Your Customer (e-KYC): In order to reduce the risk of identity fraud,
documentary forgery and have paperless KYC verification, UIDAI has launched its e-KYC
services and RBI permitted e-KYC as a valid process for KYC verification. Under the e-KYC
process under the explicit consent of the customer and after his or her biometric
authentication from UIDAI data base individual basic data comprising name, age, gender and
photograph can be shared electronically with Authorized Users like Banks etc.
Direct Benefit Transfer Scheme: The Govt. has decided to transfer direct benefit transfer
payments to the bank accounts of the beneficiaries under the various govt. programs through
Electronic Benefit Transfer (EBT) such as LPG Subsidy etc. The Govt. has given emphasis to roll
out subsidies/direct cash transfer on the basis of Aadhaar/UID number of the resident.
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): The scheme is a one year cover Term Life
Insurance Scheme, renewable from year to year, offering life insurance cover for death due to
any cause. However, for subscribers enrolling for the first time on or after 1st June 2016,
insurance benefit shall not be available for death (due to any cause other than accident)
occurring during the first 45 days from the date of enrolment into the scheme. Death due to
accidental causes will be covered from day one of insurance coverage.
Benefits - The benefits under the scheme is Rs. 2 lacs is payable on a subscriber’s death due to
any cause.
Premium - The premium payable is Rs. 436 per annum per subscriber. Initially on launch for
the cover period from 1st June 2015 to 31st May 2016 subscribers were expected to enroll and
give their auto-debit option by 31st May 2015, which was extended up to 31st May 2016.
Pradhan Mantri Suraksha Bima Yojana (PMSBY): The scheme is a one year cover Personal
Accident Insurance Scheme, renewable from year to year, offering protection against death or
disability due to accident. Natural calamities being in the nature of accidents, any
death/disability (as defined under PMSBY) resulting from such natural calamities is also
covered under PMSBY. While death due to suicide is not covered, that from murder is covered.
PMSBY covers death confirmed by documentary evidence, to have been cause by accident.
Atal Pension Yojana (APY): A pension scheme for citizens of India, is focused on the
unorganized sector workers. Under the APY, guaranteed minimum pension of Rs. 1,000 or
2,000 or 3,000 or 4,000 or 5,000 per month will be given at the age of 60 years depending on
the contributions by the subscribers. 1) The age of the subscriber should be between 18-40
years (A person who is in age group of 18 years to 39 years 364 days). 2) He/she should have
Procedure for opening APY Account - The contribution can be made at monthly/quarterly/half
yearly intervals through auto-debit facility from savings bank account/post office savings bank
account of the subscriber. The subscriber, if he desires, he can change the mode
(monthly/quarterly/half yearly) of auto debit facility once in a year during the month of April).
Banks are required to collect Rs. 1 per month for contribution of every Rs. 100, or par thereof,
for each delayed monthly contributions.
Nomination - It is mandatory to provide nominee details in APY account. If the subscribers are
married, the spouse will be the default nominee. The subscriber will also be receiving physical
Statement of Account once a year.
The subscribers under the Swavalmban Scheme, who are beyond the age of 40 and who do
not wish to continue under the Scheme, may opt out by complete withdrawal of entire amount
in lump sum, or may prefer to continue till the age of 60 years, to be eligible for annuities there
under.
In case of death of subscriber due to any cause after the age of 60 years, pension would be
available to the spouse and on the death of both of them, the pension wealth accumulated till
age 60 of the subscriber would be returned to the nominee.
In case of death of subscriber before 60 years, the entire accumulated corpus under APY will
be returned to the spouse/nominee. However, pension shall not be payable to the
spouse/nominee.
Exit before 60 years of age is generally not permitted, it may be permitted by PFRDA only in
exceptional circumstances, i.e., in the event of the death of beneficiary or terminal disease
etc., in-line with the provisions for pre-mature exit under NPS.
In case a subscriber who has availed Government co-contribution under APY, choose to
voluntarily exit APY, at a future date, he shall only be refunded the contributions made by him
to APY, along with the net actual accrued income earned on his contributions.
Self-Assessment
Strictly for Internal Circulation only
Prepared by Learning & Development Unit
Page 35 of 50
1. What is the monthly installment (as his contribution) to be paid by a person if he joins
APY at the age of 18 years and he wants to get a minimum monthly pension of rupees
5,000 per month at the age of 60 years?
a) Rupees 291
b) Rupees 240
c) Rupees 210
d) Rupees 126
2. Banks have assigned for opening of Basic Savings Bank Deposit Accounts under
financial inclusion through Business Correspondents.
a) Scheme codes
b) Personal Identification Number
c) Aadhaar Number
d) PRAN
4. PoS Machine is a small device installed at almost all Business Centers to facilitate
cashless purchases to their customers. PoS stand for
a) Payment on Sale
b) Point of Sale
c) Point of Settlement
d) Purchase and Sales
5. ATM is one of the banking channels. Here, the abbreviation ‘ATM’ refers to-
_____________
a) Data
b) Movement
c) Only bank account number
d) None of the above
a) A minor of above the age of 18 years can open his/her Savings Bank account in any bank.
b) A minor of above the age of 10 years can open his/her Savings Bank account in any
bank.
c) A minor of above the age of 12 years can open his/her Savings Bank account in any bank.
d) A minor cannot open the account under the scheme
8. The age for coverage under the scheme of life insurance cover under PMJDY
is___________
a) Age group of 21 to 59
b) Age group of 18 to 59
c) Age group of 18 to 60
d) Age group of 21 to 60
9. The sum assured for the Life Insurance cover provided under the PMJDY scheme
is__________.
a) Rupees 30,000
b) Rupees 5,000
c) Rupees 25,000
d) Rupees 1,00,000.
Technology for Low Cost Financial Inclusion: The features of the three main models presently
being utilized by some banks in the country are:
i. Hand held device with a contact card - Main features of the system are:
Compact and portable device, easy to carry in field and ideal for a rural/semi-urban scenario
A 2-4-line display, 16-key keypad, a thermal printer with eight hours of battery life.
Support for various financial/non-financial transactions in offline mode in field such as,
deposit, withdrawal, account transfer, standing instruction, new product request and alerts.
Support for remote parameter configuration such as, maximum daily withdrawal amount,
maximum cumulative and account balance.
Settlement among multiple banks using the same infrastructure
iii. Kiosk Banking - It is an Internet enabled PC based technology and extremely easy to use.
Therefore, anyone can become a Business Correspondents (BC) and open customer accounts
at Customer Service Point Kiosk outlet (CSP). Retailers can now be appointed as Customer
Service Points for Business Correspondents and CSP can carry our banking transactions on
behalf of its Bank. It helps a CSP/Business Correspondents to boost-up their earning in a faster
way. The Kiosk banking helps to become a Mini-Branch of a bank.
Self-Assessment
a) Mobiles
b) Computer/Laptop
c) Credit Cards
d) Pre-paid cards
A common code *99*99# has been adopted for all TSPs (Telecom Service Providers). It is called
Query Service on Aadhar Mapper (QSAM) that allows the users to check the Aadhaar seeding
status in the bank account along with the last updated date.
Mobile Banking: Banks have been offering application based mobile banking services. Bank
customers need to download the application and can avail host of banking services such as
Non-Financial transactions (Balance inquiry, Mini statement, Cheque book request), Financial
transactions (Fund transfer, Mobile/DTH recharge, Bill Pay etc.).
Mobile Wallets: Mobile Wallet is one of Prepaid Payment Instruments (PPIs) and there are
three types of PPIs – closed, semi-closed and open (not necessarily for mobile only).
White label ATMs do not have bank logos but, instead, the logo of the private service provider
of white label service. In case of such ATMs, the settlements, etc., are with a sponsor bank,
and dispute resolution is with the card issuing bank.
Brown label ATMs are those where the operations are outsourced to a third party. The third
party (a private company) owns and operates the ATM machine, party its rent/bills, etc. A bank
provides cash for the ATM and connectivity with ATM network systems such as NFS (National
Financial Switch) of NPCI. The concept of “Brown Label ATMs” is midway between bank-owned
ATMs (proprietary) and White Label ATMs.
For 6 Metro cities, viz., Mumbai, New Delhi, Kolkata, Chennai, Bengaluru and Hyderabad
Maximum 5 times a month, free usage at own banks
Maximum 3 times a month, free usage at other banks
Rs. 2 per transaction, after free usage limit
Aadhaar is a 12-digit unique number which the Unique Identification Authority of India (UIDAI)
issues for all residents of India. From the perspective of banking operations linking/seeding of
Aadhaar number in the account facilitates following three major benefits:
i. Credit of various Government sponsored subsidy/benefit schemes such as DBT/DBTI/MNREGA
directly in Bank accounts through Aadhaar Payment Bridge System (ABPS) thus preventing
leakage/corruption.
ii. Used as KYC (know your customer) in account opening process.
iii. Banking Services/Transactions using Aadhaar Enabled Payment System (AEPS) through BC
network on the basis of biometric authentication of the customer from UIDAI data base.
RuPay Card is SMS/DMS based Card product: The Dual Message System (DMS) provides for the
transmission of authorization requests and results among issuers, acquirers and other
transaction processors or networks. The Single Message System (SMS) switches financial
messages and provides transaction and settlement reporting. Security features
[(Hologram/HICo Magstripe/Signature Panel/Pre-printed 4 digits of IIN (Issuer Identification
Number) CVD (Card Verification Data i.e., CVV)]
In case of a few contingencies, like death or permanent disability due to personal accident, the
card holder’s kin (for ‘death’ case) or cardholder (in ‘disability’ case), (sum Rs. 1 lac) would be
eligible to get the insured sum – Rs. 1 lac for ‘Classic’ Card holders, & Rs. 2 lacs for ‘Premium’
Card holders, provided card has been used in preceding 90 days of the accident, and a
customer is insured for 1 card only.
Unified Payments Interface - UPI is a system that powers multiple bank accounts into a single
mobile application (of any particular bank), merging several banking features, seamless fund
routing & merchant payments into one hood. UPI-PIN (UPI personal Identification Number) is
a 4-6 digit pass code to be created during first time registration with this App.
BHIM - Bharat Interface for Money (BHIM) is an app that helps to make simple, easy and quick
payment transactions using Unified Payments Interface (UPI). BHIM can be used currently on
all handsets with Android OS version 4.2 and above as well as iOS 8.1. A Virtual Payment
Address (VPA) is a unique identifier which can be used to send and receive money on UPI. It is
like an email ID which can be used to transfer money. Currently it is available in 13 languages,
Bharat QR Code - A QR code consist of black squares arranged in a square grid on a white back
ground which can be read by an imaging device such a camera. Bharat QR is P2M (Person to
Merchant) Mobile payment solution. This solution is mutually derived among NPCI, Visa and
Master card payment networks.
Self-Assessment
1. Which amongst the below mentioned forms of banking come under digital banking?
a) Branch Banking
b) Mobile Banking
c) Cheque Deposit
d) SMS Banking
a) Cash Withdrawal
b) Update Mobile Number
c) Recharge Mobile
d) Pay utility bills
e) All the above
6. By using QSAM service one can check their aadhaar seeding status with their bank
account by dialing
a) *99#
b) *999*9#
c) *99*99#
d) *999#
8. Under Pradhan Mantri Jan Dhan Yojana (PMJDY), the account holder is provided with
a Rupay Debit Card with inbuilt accident insurance cover upto Rs. ____________.
a) 5 lakhs
b) 4 lakhs
c) 2 lakhs
d) 1 lakh
CHAPTER 13
COMMUNICATION AND FINANCIAL COUNSELLING (INCLUDING FINANCIAL
LITERACY AND FINANCIAL EDUCATION)
Many banks have launched Credit Counseling Centers as a part of their corporate strategy in
tackling the need for faster Financial Inclusion in villages. This initiative provides financial
education services as a supportive activity to financial counselling.
Depositor Education and Awareness Fund: The fund has been created by RBI and all banks
have been advised to transfer inoperative deposit accounts which have not been claimed or
operated for a period of ten years or more or any deposit or any amount remaining unclaimed
for more than 10 years to the FUND.
Soft Skills and Hard Skills - Hard skills are academic skills, experience and level of expertise
while soft skills are self-developed, interactive, communicative, human and transferable skills.
Soft skills are the skills of learning, how to be nice, how to play together, when and where to
use our manners, the development of social graces, how to resolve conflict, how to express
appreciation by learning how to use language in a way that persuades others.
Soft Skills to build relationships - Soft skills are nothing but the relationship building towards
customers. Here are some common soft skills that help to deliver the best customer service
and build relationships:
Good Communication: The ten points to be remembered in good communication are
i. Listening
ii. Politeness
iii. Clarity
iv. Empathy
v. Remove Obstruction
vi. Patience
vii. Eye Contact
viii. Do not argue
Listen.
Use the bank’s policy as guidelines, or not as hard-and-fast rules.
Ask questions.
Go the extra mile in solving the problem.
Be efficient.
Self-Assessment
1. Communication skill is a
a) Academic Skill
b) Hard Skill
c) Soft Skill
d) None of the above
End of Module
Indian Institute of Banking & Finance (2019): Inclusive Banking Thro’ Business
Correspondent (Payments Bank).
“DISCLAIMER: