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Nomination for Financial Inclusion Award

Award applied By: PSU Bank

Part I:

Introductory Information:

Project name: TURNING THE TIDE – A DEVELOPMENT PROJECT FOR

FISHERMEN

Name: Indian Overseas Bank

Award Category Applied for Access to Banking and Financial Services

Address: Indian Overseas Bank, Central Office, 763 Anna Salai

City: Chennai Pin: 600 002 State: Tamil Nadu

Institute /Organization: Indian Overseas Bank

JOB Title: NA

State: TamilNadu

Country: India

Telephone: 044 2851 9526 email : finin@iobnet.co.in

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PART 2 Questionnaire

Access to Banking and Financial Services

1. Brief Overview of the Project:

TURNING THE TIDE

A DEVELOPMENT PROJECT FOR FISHERMEN

The glitz and glamour of urban India has never succeeded in wiping out

the pockets of poverty that dot the metropolitan landscape. There are

innumerable slums which stick out like sore thumbs amidst the concrete

jungles of our metropolis all over the country.

But there is a colony of sea faring fishermen that has thrived along the

coast of Bay of Bengal on the well known Besant Nagar area of

Chennai , which neither sticks out like a sore thumb nor assails the

senses ; simply because it has remained almost invisible to the urban

eyes. This is Odaimanagar , a coastal slum whose isolated location does

not interrupt the spread of beautiful new buildings of Besant Nagar.

Even neighbouring residential complexes may not have noticed its

existence even though the colony is quite large in size. The affluent and

posh neighbourhood has remained virtually blind to its existence; but it

has more than 1200 families engaged in the daily grind of fishing and

fish-selling. Men venture out into the mighty Bay of Bengal in their fishing

boats while women wait for them to return with catches which they

would sell .

Besant Nagar is an upmarket locality of Chennai which is also a decent

tourist spot. Rich in tradition and history, Besant Nagar houses the famous

Theosophical Society and Elliot’s Beach. Now the area has become a

hot spot for the IT professionals whose westernized lifestyle coexists with

the traditional Tamil Brahmins in a peaceful harmony that defines

today’s Besant Nagar. It is precisely this harmonious peace of the

locality which made the society oblivious of the existence and needs of

Odaimanagar’s fishing community till IOB stepped in.

The residents of Odaimanagar were themselves not fully aware what

they were missing. When IOB took up this slum for its urban Financial

Inclusion programme , the first job was to list out the issues that needed

to be tackled. It was not a mandated assignment of the bank under any

target or direction; but taken up voluntarily with zeal and enthusiasm. A

long but manageable list of issues emerged from interaction with

residents and social workers. The core issues were;(a) basic Inclusion with

bank accounts (b) Availability of credit (c)Profession-specific scheme

for fisher-women (d)Awareness on health and hygiene (e) Insurance

cover especially for sea-faring fishermen (f) Inculcation of savings habits

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(g) De-addiction form liquour and (h) Quick , on-the-spot overdraft in

times of need.

This covered financial and social issues besides health concerns. IOB set

up its plan for solving financial issues and assisting in providing solution to

remaining issues. The first job was to appoint a Business Correspondent

which was done in July 2011. Initial response was lukewarm mostly

because of people’s silent acceptance of their lot, attributed to destiny.

There was no role for a bank or any other agency in their plan of things.

Even the BC found the activity unworthy of his time and had to be

replaced in 2012. Taking the matter forward from such a low-key activity,

the Bank worked at a steady pace. Now IOB not only generated the

need but also brought in the basic services to this community.

2. What were the challenges being faced before deployment or what

specific problem was sought to be addressed?

Following were the major challenges. Each one of the problems had to

be addressed in order to move forward.

a) Generating Need :

Stoic Acceptance of the situation by the targeted people was a

challenge. The limited needs and aspirations of the fishermen never

allowed them to feel the necessity of a bank account. The ultimate

desire for inclusion never went beyond a ration card. It was necessary

to create the need for inclusion before administering financial inclusion

like a medicine. The task became easier when it became clear to the

people that credit is also an input of inclusion. Moreover the

announcement about food subsidies coming through bank accounts

was a major booster. Repeated sessions of counselling by Bank officials

contributed to the process of generating in the minds of the people a

strong need for financial inclusion. Now 1300 residents have opened

banks accounts since implementation of the project thereby covering

100 % of households.

b) Awareness and Literacy:

Lack of awareness about financial services and products, coupled with

absence of financial literacy was the second hurdle which had to be

overcome. This was surmounted by imparting awareness about financial

services and products through literacy camps organised in the slum.

c) Business Correspondent :

While no competent and willing person was available in the community

to work as Business Correspondent, importing a BC from outside the

locality would have become counter-productive, Persons from the slum

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were motivated. The first BC appointed by the Bank could not perform;

so a second individual was identified after careful scrutiny, motivated

and trained to handle the job. There was also an issue about the

remuneration of the BC, but it was sorted out by the modified BC

remuneration package adopted by the Bank which has opened up

attractive earning opportunities. The present BC of Odaimanagar has

taken it up as a career.

d) Confidence Building :

Another snag we encountered was the resistance of the residents to

open bank accounts and avail banking services through Business

Correspondents. Bank meant only a brick and mortar structure to them.

Demolishing this fixation and building their faith on a person with a hand

held device as the bank representative was a big challenge. Our

enduring efforts finally got the residents accustomed to the mechanism.

3. Description of Solution Designed and implementation process:

Business Correspondent is engaged for delivering Banking services. A

portable, small size, hand held swiping machine (POS) with a GPRS

enabled SIM card establishes the connectivity to the Bank’s server. This

ensures transactions being “instant” “real time” and “on line”. Biometric

enabled smart cards are provided to the customers who operate the

cards at POS terminal for conducting various banking transactions.

Transactions are user friendly & guided through voice navigation in the

local Language. Transaction slip is provided to the customer at the end

of the every transaction. Biometric authentication of transactions insures

against impersonation and non-repudiation.

ICT solutions are employed by our Bank for the following business

applications

• Enrollment of customers

• Transmission of data for issue of smart cards

• Performing Financial transactions

• Transaction synchronization with the Core Banking Solution (CBS)

of our Bank through FI Gateway solution

IT solution for financial Inclusion encompasses the following solution

components:

Customer Acquisition & Transaction System:

This enables the Business correspondents to perform the customer

related transactions viz., capturing of fingerprint and photograph of

customers for issuing Smart Cards.

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Hand held Terminal

This contains smartcard reader (ISO 7816), display panel, finger print

sensor, printer, webcam, power back-up etc. It establishes connectivity

through GSM/CDMA.

Hand held Terminal Application:

This caters to the following main Customer Centric functionalities of the

Bank:

• Capture photo and biometric fingerprint

• Uploads and downloads transactions and files to the intermediate

Server

• Carry out all Financial transactions

• Supports online transactions through GSM/CDMA.

Smartcards

Our Biometric Smart Card is 32 KB contact based card conforming to

the open standards prescribed by IDRBT. The card has a capacity of 10

years of data retention as well as operating in ambient temperature

range of 25 to 70 degree Celsius.

Card Management System, which does the end-to-end smart card

management like personalization, printing, post personalization etc.

FI Gateway solution is an application which receives transactions from

Delivery Channels as Hyper Text Transfer Protocol Secure (HTTPS) request,

and synchronizes with Bank CBS.

Some of the features of FI Gateway solution are given below:

• Centralized financial & non-financial parameters maintenance.

• BC / Agent maintenance.

• Audit trail of all administrative activities.

• Log of all transactions.

• Secure Sockets Layer (SSL) mode of communication.

• Terminal authentication

• Report of all transactions processed during the day

Transaction process flow

BC primarily identifies the customer from the Photo in the smart card

and biometric authentication by fingerprint scanning. Through Mobile

connectivity, request feed at the POS terminal is carried to the FI server

in the encrypted form, and then it hits the Bank CBS. Upon processing of

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the request at Bank’s CBS, success /failure of the request is responded

to the FI server, which in turn responds to the POS terminal.

4. What benefits have been derived post implementation?

a) On operational front:

Access could be provided to banking services through an alternative

user-friendly business model where setting up normal brick and mortar

branch would not have been viable. Service made available on 24 x 7

basis at their door steps of customers , demolishing barriers of time and

place. Also helped bank in enhancing visibility.

b) From Customer’s perspective :

People need not visit branches to undertake banking transactions by

foregoing daily wages by spending a day, as the services are made

available at villages free of cost . Smart Card Banking has created

good impact among the slum dwellers. Number of persons utilizing the

banking service has been increasing significantly, as evidenced from

increase in number of transactions over the period of time.

c) Strategic competitiveness:

The Project made our bank’s presence felt strategically even in

uncharted territories like urban slum. Our Bank sees introduction of the

business correspondent based banking outlet as a potential market for

improving low cost deposit and wide business opportunity in future. This

will open opportunities for cross selling other products.

Cash deposit

Cash withdrawal

Loan disbursement

Loan repayment

Funds transfer*

Balance enquiry

Mini Statement

Addition of new

accounts to the

card*

CUSTOMERCUSTOMER

Core Banking Solution

Transactions

latigid

FI Gateway

GPRS/GSM/PSTN

* Not supported in Offline mode

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It has created a competitive edge and increased market share of our

bank in the market in coming years.

d) Financial impact:

a. Smart Card Banking has inculcated the habit of thrift.

b. It has weaned people away from local moneylenders to formal

banking system

c. Granting small value credit facilities like temporary overdraft for

meeting their emergent requirement & tailor-made credit facilities like

IOB Sagarlakshmi etc. have facilitated easy access to credit.

d. Enhanced bank’s catchments area for fresh business. e. Opened up

opportunities for CASA by bringing the savings of the poor households

into books of banks.

5. What are the key learnings ?

Business Model:

Experience tells us that extending ICT based banking services through

financial intermediaries like Business Correspondents is most suitable

model for urban FI initiative specially for small value accounts. Doorstep

delivery of service is suitable for low income group as they need not

spend a day to remit their savings in bank branch sacrificing wages for

the day.

Security features in the system create trust and confidence in the minds

of people giving peace of mind that their money is safe in the bank

account and not laid in the hands of any person.

People at Odaimanagar now start considering convenience rather than

cost to the service.

Financial disbursement:

We do not stop our reach just by providing access to basic banking

facilities like remittance, withdrawal etc. We go further to give access to

credit to this excluded segment of population for their developmental

and emergent needs in the project. So far 114 persons are provided with

various forms of credit facilities. We observed that poor people are

bankable contrary to the general belief. Credit dispensation is inevitable

for transforming the cost centric business model into a revenue

generation model.

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Technology Front:

Smart card transaction is on-line. This has eliminated the need of

reconciliation of accounts leading to instant credit/debit into the

account which is a major factor creating trust among the customers.

However we experience difficulties in undertaking transactions where

mobile connectivity is poor. We need the help of Government to resolve

this issue.

We have tailor made and customized bank products and services

through normal banking channel for various purposes and different

classes of people. FI customers also need customized banking services

and products. Robust technological infrastructure encompassing all

stakeholders like Banks, Government agencies, Micro insurance

companies etc through the channel of Business Correspondents need to

be developed. This will make Electronic Benefits Transfers, remittance

system, insurance facilities etc more efficient and attractive.

6. Benefits – Please compare the pre-deployment and post-deployment

scenario, and explain how the solution deployed has helped?

The pre-deployment scenario was all the more similar to the

characteristics of the financial exclusion prevailing throughout the

country viz., poverty, lack of access to formal banking, absence of thrift

habit & developmental activities because of lack of financial assistance

and no financial planning in spending their income etc., There was no immediate effect during the initial period of the project

implementation. Owing to our sustained efforts through branch and BC

we made the people to realize the benefits of the services available

and started using the services. In addition to basic banking transactions,

the people had started availing credit facilities for their developmental

needs. In order to meet the emergent requirement of the FI customer we

have enabled automatic overdraft facility in the no-frills accounts

through the Business Correspondent operated POS terminals, which they

earlier used to obtain from the private moneylenders at an exorbitant

interest rate.

People have started conducting banking transactions regularly and

remitting the excess money from their earning into their account. Thus,

the habit of thrift and financial planning has been inculcated into the

people. It has also familiarized the various banking products and

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services paving way to market improved financial products like micro

insurance, cattle insurance etc. It is a win-win proposition for the Bank

and the customers. As the customers are now accustomed and know

about the various products it is easier for the bank to market the

products to the targeted customers resulting in improved business. In the

customer perspective, it is for their financial and social well-being.

7. Short CV of producer Indian Overseas Bank is a Public Sector Bank having its headquarters at

Chennai, Tamil Nadu with Pan India and International Presence.

8. How is this initiative different and More deserving from similar projects

undertaken by your peers in similar areas?

� Account Opening:

Opening an account alone is not financial inclusion which needs to

be viewed in a broader perspective. For our Bank, opening an

account is perceived as opening a window for progress and growth

for individuals and society at large.

� Temporary overdraft :

Banking facility is not restricted to account only but we supported

them with financial assistance to enhance their livelihoods. Financial

assistance is provided for their emergent and developmental needs.

Temporary overdraft facility is enabled through smart card operated

accounts, which can be availed through Business Correspondent

POS terminal.

� IOB SAGARLAKSHMI

This is segment – specific product exclusively for fisherwomen who are

engaged in various activities related to fishing viz., post harvest

handling, preservation, processing and marketing of dry fish/ seafood

products etc., but they lack access to finance from the formal

banking system. Considering their problems and to empower

fisherwomen through capacity building, our Bank formulated a

scheme namely IOB SAGARLAKSHMI exclusively for financing

fisherwomen. Objective of the scheme is to liberate the fisherwomen

from the clutches of usurious moneylenders and empower them with

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sustainable income generation. So far 78 fisherwomen of this slum

have been granted loans under the scheme.

� Insurance - “IOB Jeevan”

Fishermen sailing sea, risking the life for the livelihood are not sure of

their return to shores. They are not aware of insurance coverage and

its benefits to their family during any untoward incident. Our Bank has

felt the need for insurance coverage to them. These fishermen were

covered under the customised scheme viz., “IOB Jeevan” at a very

low premium. Residents are sensitized to enroll into the scheme for

availing life cover benefits.

� Health Care Awareness:

These poor fishermen are easily susceptible to various contagious

diseases. Hence our bank has conducted awareness

camp/mimicry/mini drama on Healthcare on prevention of

Cancer/Dengue/AIDS in Odaimanagar slum

� Scholarship:

Our Bank has come out with a new initiative to award poor

meritorious girl students with scholarship of Rs.1000/- each for 5

members from Standards VI to X in High School to help them reach

higher educational standards.

9. In case your project is selected for certificate of merit/award, who in

your organization will receive it.

CMD of our Bank Shri M Narendra will receive the award.

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