Latest Steps

To Provide
Financial
Inclusion
White Label ATMs
Mobile Banking In Rural Areas
Payment Banks
Minor Accounting Opening
Small Bank
Pradhanmantri Jan Dhan Yojana
BRICS Development Bank

By RBI
and Govt.

Causes Responsible For Economic

Backwardness of India:

Capital Deficiency

Weak Infrastructure

Growing Population

Primitive Agriculture

Lack Industrial Development

Low Per-capita Income

Income Disparity

Lack of Opportunities

Foreign Pressure

General Scenario

SHARE IN GDP (% Y-O-Y) AND GROWTH RATE OF AGRICULTURAL SECTOR

25

20

15

10

-5

2000-01 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Share
5.4
5.4
5.5
5.5
5.6
5.4
5.6
5.7
Growth Rate
-2.4
15.8
20.6
16.7
14
11.4
14.9
13.2

WHITE LABEL-ATMS

What is White label-ATM?

Traditionally, Automated Teller Machines (ATMs) have respective banks

logo. So just by looking, this is SBIs ATM, this is ICICIs ATM and so on.

But White label ATM doesnt have such Bank logo, hence called White label
ATMs.

RBI has given license / permission to non-bank entities to open such ATMs.

Any non-bank entity with a minimum net worth of Rs.100 crore, can apply
for white label ATMs. (not just NBFC, any non-bank entity can apply.)
Late 80s: first ATM in India;
2012: RBI issues guideline for White label;
2013: RBI gives license/permission.
Tata Communications Payment Solutions
Limited =the first company to get RBIs
permission to open White label ATMs.

They started their chain under brandname

Indicash.
Other White label= Muthoot Finance, Srei
Infra., Vakrangee Software, Prizm
Payments, AGS. More than 15 companies
given such permission.

Why do we need White Label

ATM?

ATMs offer convenience to customer (Because he doesnt need to visit

Bank branch every time). ATMs are open 24/7, and even on holidays.

Convenience to bank, because they dont have to keep large

staff/office (compared to a system without ATMs). It reduces their cost of
branch-operation.

But in India, ATM penetration has been very low. Observe:

Country
USA
UK
China
India

Approx. No. of ATMs per 10

lakh population
1400
500
200
less than 100

Most of the ATMs concentrated in urban areas- that too only at prime
locations e.g. near shopping malls and airports= financial inclusion not
achieved.

White label ATM:

Challenges /
Limitations /
Problems

Biggest challenges = office rent + Security guard.

Loss making business at the moment.

Too much competition With Bank ATMs

Last year, a lady was brutally attacked in ATM booth in

Bangalore. Police have warned all banks to put security
guards=input cost increased. Banks themselves admitting
five transactions free every month=loss making in this
scenario.

SBI has the largest ATM network in India (30,000), But even
SBI chairman herself has admitted their ATM business is
making losses.

Customer complaint: failed ATM

Mobile Banking

The Department through National Payments Corporation of India (NPCI)

Common USSD Platform for all Banks and Telcos

Using Unstructured Supplementary Service Data (USSD) based Mobile

Banking.

The Department helped NPCI to get a common USSD Code *99# for all
Telcos.

More than 20 Banks have joined

The product has been launched by NPCI with BSNL and MTNL. Other Telcos
are likely to join in the near future.

Facilities like Money Transfer, Bill Payments, Balance Enquiries, Merchant

payments etc.

A simple GSM based Mobile phone, without the need to download

application on a Phone as required at present in the IMPS based Mobile
Banking

Payments Banks

1) Objective:The primary objective of setting financial inclusion by providing

small savings accounts and

payments/remittance services to migrant labour workforce,

low income households, small businesses, other unorganized
sector and other users.

2) Registration , licensing and regulation:

The Payments Bank will be registered as a public limited

company under the Companies Act, 2013, and

licensed under Section 22 of the Banking Regulation Act, 1949

3) Scope of activities :

Acceptance of demand deposits. Payments bank will

initially be restricted to holding a maximum balance of Rs.
100,000 per individual customer.

Issuance of ATM/debit cards. Payments banks, however,

cannot issue credit cards.
Distribution of non-risk sharing simple financial products
like mutual fund units and insurance products, etc.
Using Latest Technology and also Providing Brail Key Pads
and Speakers for Blind People.

4) Capital requirement :
The minimum paid-up equity capital for payments banks shall
be Rs. 100 crore.
The payments bank should have a leverage ratio of not less
than 3 per cent, i.e., its outside liabilities should not exceed
33.33 times its net worth.

5) Promoter's contribution:
The promoter's minimum initial contribution to the paid-up
equity capital of such payments bank shall at least be 40 per
cent which shall be locked in for a period of five years.

6) Foreign shareholding:
The foreign shareholding in the payments bank would be as
per the Foreign Direct Investment (FDI) policy for private
sector banks as amended from time to time.

MINOR ACCOUNTS OPENED BY

VARIOUS BANK

Minors account open above the age of 10 years

and allowed to operate bank account
independently.

Minors operate bank account only with a parent

or guardian.

All children and teenagers below the age of 18

are considered minor.

Banks are free to offer additional banking facilities

like internet banking, atm/ debit card, cheque
book facility etc.,

Subject to the safeguards that minor accounts are

not allowed to be overdrawn and that these
always remain in credit.

MINOR ACCOUNTS
OPENED BY VARIOUS
BANKS

ICICI Bank-Smart Stars account

Federal Bank- Young Champ

Account

Axis Bank-Future Star

ING Vysya Bank : Zing Saving

Account

Yes Bank-My First yes Account

HDFC Bank-Kids Advantage Account

Kotak Mahindra-My Junior Account

IDBI -Power Kidz Account

SBI - Pehla Kadam Pehli Udaan

SMALL BANKS

SMALL BANK

A week after Budget announcement, the Reserve Bank

today issued draft guidelines for setting up of 'local feel'
small banks, which will disburse small-ticket loans to
farmers and businesses.

The central bank also issued draft guidelines for setting

up of payment banks, which will cater to marginalized
sections of society, including migrant labourers, for
collecting deposits and remitting fund.

Such banks can be set up with a minimum capital of Rs

100 crore as against Rs 500 crore required for normal
commercial banks, according to the guidelines.

OBJECTIVES

A small bank will be allowed to accept deposits as

well as lend

operations will be restricted to a select category of

customers, such as small farmers and unorganised
sector entities.

operations will be limited to a well-defined area

geographically, such as a State or a Union
Territory, to give a very local feel.

Resident individuals/professionals with 10 years of

experience in banking and finance, companies
and societies will be eligible to set up small banks.

existing NBFCs, Micro Finance Institutions (MFIs),

and Local Area Banks can also opt for conversion
to small banks, the RBI said.

OPERATIONS OF SMALL BANK

Full Technology Absorption for cost saving and fast

delivery of services

Aim will be to provide savings instruments to the

un-served and under-served sections of the
population

Give loans to small farmers, micro and small

enterprises, and other un-organised sector
businesses, the RBI said

Local focus and the ability to serve smaller

customers will be the key criteria in licensing such
banks

Regulation of Small Banks

Mandatory for small banks to maintain a capital

adequacy of 15 per cent of its risk weighted assets
on a continuous basis

The small bank will be subject to all regulations of RBI

as applicable to existing commercial banks,
including the maintenance of cash reserve ratio
and statutory liquidity ratio.

The promoters initial contribution should be at least

40 per cent of the banks total paid-up capital

At least 50 per cent of its loan portfolio should

constitute loans and advances of size up to 25 lakh
to extend loans primarily to micro enterprises.

PRADHANMANTRI
JAN DHAN YOJANA

INTRODUCTION

On 15th August 2014, PM Mr. Narendra Modi announced the

Financial Inclusion mission titled Pradhanmantri Jan-Dhan Yojana.

Jan-Dhan Yojana roughly translates into English as Peoples

Wealth Scheme.

Primarily the PMJDY Scheme is meant for those who do not have a
savings bank account.

Slogan Mera Khata Bhagya Vidhaatha.

Only 58% of Indian citizens are having a bank account.

Goa, Kerala, Chandigarh, Puducherry, Lakshadeep have achieved

100% financial inclusion under PMJDY.

Aim of PMJDY

To bring poor Financially Excluded

people into banking system.

Focuses on coverage of Households

It covers both Urban & Rural areas.

Rise of Indian Economy.

To decrease corruption in
Government Subsidy schemes.

Digital India.

To ensure access to financial

services, namely, Banking/ Savings
& Deposit Accounts, Remittance,
Credit, Insurance, Pension in an
affordable manner.

Benefits of opening
bank a/c under PMJDY

Account can opened with zero balance.

Not required to maintain any minimum

balance.

RuPay ATM of NPCI is issued.

Accident insurance of 1,00,000 by HDFC

Ergo .

Medical insurance of 30,000 by LIC.

Overdraft facility of 5000 after 6 months if

account is still operated.

Mobile banking facility

Beneficiaries of Government Schemes will

get Direct Benefit Transfer in these
accounts.

Access to Pension, insurance products.

BRAZIL
RUSSIA
INDIA
CHINA
SOUTH AFRICA

The Headquarters will be at SHANGHAI,

CHINA.

INDIA will Head the Bank for FIRST FIVE

YEARS. Followed by BRAZIL AND RUSSIA

BRAZIL, RUSSIA, INDIA, CHINA, SOUTH

AFRICA
BRICS DEVELOPMENT BANK

Aim is to fund infrastructure Projects in Developing

Nations, The funding will start by 2016

$100 Bn. Development Bank Setup jointly by BRICS

$10 Bn. Equity Contribution by Each of the Five

Members, Giving them Equal Stake.

Initial Contribution $ 50 Bn. Which Comprises $ 10

Bn. In Cash and Rest $ 40 Bn. In Guarantee

It is Open to Expansion to other Countries But BRICS

Equity cant drop below 55% like Bangladesh.

Contingent Reserve Arrangement

$ 100 Bn. Currency Reserve pool to help meet short term

liquidity pressure.

Because Developing countries Faced Flight of Capital after

US Announced Intention of Winding down Monetary Stimulus.

The Pool will be Held by each Country in its Own reserves and
Shift to member Country when needed

Contribution in $ Bn.
South Africa
Brazil
Russia
India
China
0

10

20

30

40

50

How much More if Required

China (Half Its Contribution)

$ 20.5 Bn.

India (Its Contribution)

$ 18 Bn.

Russia (Its Contribution)

$ 18 Bn.

Brazil (Its Contribution)

$ 18 Bn.

South Africe (Twice Its Contribution)

$ 10 Bn.

$ Bn.
12%

24%

China

21%

India

21%

22%

Russia

Brazil
South Africe

Big Implications

Funds will become available for infrastructure for long

term projects

Contingent Reserve Arrangement will provide extra Forex

to Countries in the event of Crisis

It will put pressure on the west to loosen its iron grip on the
World Bank and IMF

Market Volatility will Decrease specially in the event of US

Winding down its Monetary stimulus

Strong economic relationship among BRICS nations

Bank will help India get capital to develop infra structure

Forex cushion will help India to safeguard its

Current Account Deficit which is already in
bad shape

Links

http://www.rbi.org.in/scripts/BS_SpeechesView.aspx
?Id=862

http://financialservices.gov.in/banking/financialincl
usion.asp

http://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?
prid=32615

http://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?
prid=32614

http://rbi.org.in/scripts/NotificationUser.aspx?Id=728
6&Mode=0