FINANCIAL INCLUSION DEPARTMENT
Union Bank Bhavan, 239 Vidhan Bhavan Marg, Nariman Point, Mumbai-400 021
1. BANK’S VISION:
Union Bank launched Financial Inclusion (FI) initiative three and half years back at
Chahania Block of Chandauli district near Varanasi , with a Vision "To reach the
unreached by extending financial services at an affordable cost on an "ongoing basis"
thereby to improve quality of life of those who have been hitherto deprived of
financial services from formal Financial Institutions". In this Pilot, biometric smart
card technology was adopted for providing banking services at the doorsteps of
villagers using BC Model
The Bank’s vision envisages
• Extending basic banking facilities to unbanked & marginally banked
• Adopting both Branch and Branchless Banking
• Providing Financial Literacy for gainful utilization of services
• “Need “ creation among the target group
• Extending a combination of banking products:
• No Frill Savings Account
• Micro Credit
• Micro Insurance
• Spreading Financial Literacy
• Village Knowledge Centers
• Financial Literacy and Credit Counseling Centers
Our Bank has drawn up a three year FI Plan for 2010-13. The Plan envisages:
Acquisition of 10 mn customers;
Extending reach to 32,000 unbanked villages;
Opening of 250 Branches in 2000+ population villages.
Tapping of micro deposits;
Popularising micro-loan products;
Creation of a separate FI vertical at CO.
The target segment is as under:
• MGNREGA/SSP beneficiaries.
• Milk Pourers.
• General FI Customers.
• Urban Poor.
2. TECHNOLOGY ADOPTED:
Bank has adopted multiple model technology to reach the unreached.
o Biometric Smart Card Technology:
In this technology, customer's data including his finger prints are stored in a
32kb microchip embedded in card and supported by Key Management System
(KMS), POS (Point Of Sale) Machine, BC for effecting transactions. Bank is
utilizing this technology for rapid expansion for Financial Inclusion.
o Mobile Phone Prepaid Technology:
Telecom Companies are coming out with preloaded software package for
opening prepaid accounts. Upon approval of KYC, etc. from Bank; the prepaid
account is activated. Thereafter, customer will be issued an ATM card for
facilitating cash withdrawal from the account. This account rides on a prepaid
account platform, does not rank for any interest benefit as that of SB a/c and
customer can use this platform only if he has Mobile phone. This mode can also
be used for Social payouts made by the state Governments. The bank has
entered into an agreement with Nokia Mobile Payment Services India Pvt Ltd
for using the Prepaid Platform for Financial Inclusion.
o Mobile Van Banking:
As part of it’s initiatives for covering the allotted 2000+ population villages
even before the given timeline, Bank has come out with another mode of
banking in the form of Mobile Van Banking for covering those villages which are
remotely located and infrastructure availability is poor. Under this model,
banking services would be provided through a van which will move from village
to village on specified days. The Mobile Van would be linked to a CBS enabled
branch. The Van would have the capacity to serve multiple villages each day of
the week. The Van would travel to unbanked villages to provide the following
range of services:
• Opening of accounts and compliance of KYC norms
• Receipt / payment of cash through banks staff on board the vehicle
• Printing of pass books/ statement of accounts through on board printers
• Collection of cheques
• Remittance facilities.
• Collection of loan applications
• Credit disbursals
3. STRATEGY ADOPTED:
o At first unbanked villages with 2000+ population will be covered
o Then unbanked villages with less than 2000 population will be covered
o Provide primary product: a No-Frill SB account with Overdraft Facility
o Based on the deposits and transaction history, micro-loans to be extended
o Financial Counseling by Specialized FI branches/ VKCs/ FLCCs
4. BANK’S PIONEERING EFFORTS:
Pioneer to introduce Bio-Metric Smart Card based Branchless Banking
Extending Bio-Metric Smart Card based banking for Urban Poor
First Bank to launch Micro-credit products on Biometric cards
Introduction of Bio-Metric Card Based micro-Remittance product in identified
corridors for migrants.
Leader in G2P payments on Biometric cards
Our Bank’s approach towards Financial Inclusion is creating a need for our customers
as there is enough demand for these products / services in the centres we operate.
The need / demand creation for these services are done by Financial Counseling
through our Specialized FI branches, VKCs and FLCCs.
Our Bank has extended it’s reach to 16300 villages across the country by June 2011.
Bank has tied up with 7 technology providers and Business Correspondents for
outsourcing the branchless banking activities. So far 6500 BC agents are servicing the
branchless banking customers in the field on pan India basis.
As of Jun '11, over 6 million customers are enrolled for biometric cards. The Financial
Inclusion customers can do transactions using their Biometric Smart cards with the BC
agents available in the village.
5. PRODUCTS OVER BIOMETRIC CARDS:
Bank has devised various deposits and loan products for FI customers over biometric
cards.Deposits products are:
(A) Deposit Products:
i) No Frills account with OD Facility
• No frill S.B a/c with simplified KYC norms
• All account holders are issued biometric smart cards.
• Authentication of transaction based on the fingerprints of the account holder
• All transactions stored in the chip embedded in the card
• In-built OD of Rs 500/- facility for meeting exigencies.
ii) Recurring Deposit
• Deposit scheme for those with small saving of Rs 25/ to Rs 50/ per week.
• Implemented through BC for biometric smart cards holders.
• Tenure upto 50 weeks.
(B) Loan Product:
An all-purpose clean loan ranging from Rs 3000/- to 12000/-
Gradual increase of ticket size on timely repayment thereby establishing
• Eligibility:- Should be a smartcard holder with minimum 4 transactions or a
month’s satisfactory operations whichever is earlier
• Repayment in 7 to 44 weekly installments.
• A Deposit linked Micro-Credit product
• Eligibility:-Should be a smartcard holder & accumulated minimum deposit of Rs
• Repayable in 7 to 44 Equated Weekly installments
• Loan amount Rs1000/- to Rs.20000/-
Customized version of Bhagya loan for milk pourers of NDDB
Repayment of 50 fortnightly installments is linked to repayment cycle fixed by
NDDB for its pourers towards milk proceeds.
• Loan amount ranges between Rs20000 to Rs30000
•A loan product for purchasing milch animals
•The loan repayment is linked to the fortnightly receivables of the milk pourers.
•The term loan of Rs. 40,000 or Rs. 50,000/- will be sanctioned for purchase of
two Milch Cattle with repayment period for Medium term duration of 64 to 70
• A micro-credit product for JLG over biometric smartcard,
• Group of 5 married women from low-income group aged 21-59 years who are in
business since at least 1 year eligible;
• To meet Business needs & free from clutches of money lenders.
• Loan min. Rs. 8,000/- max Rs. 10,000/ each member with 50 weekly
6. SUCCESS STORIES OF INNOVATIVE PROJECTS:
o Bill Payment of National Dairy Development Board (NDDB) Milk Pourers: -
As it is said, that ‘Milk is a Complete Food’, the Bank thought of providing a
‘Complete End to End Solution’ to the milk Pourers for all their payment and
financial needs. The Bank adopted Branchless Banking mode by using Bio-Metric
Smart Card based Technology to extend NO Frill SB account which facilitates
fortnightly payment and savings option. The Pilot project that started with just
1000 pourers in Nanded has now turned into a full fledged project with about 1
Lakh pourers across 6 locations (in Maharashtra, Gujarat,A.P.and U.P.) through 491
Touch Points with a total disbursement of around Rs. 450 Crores. To move towards
providing comprehensive financial solution the Bank introduced two customized
medium-term loan products – Kamadenu for purchase of miltch cattle and
Kalpataru for other dairy related needs. Convinced by the success of this model,
Bank is now expanding this project to 10 new locations.
o Remittance Product for Urban Poor: - Financial Exclusion is not only restricted to
rural areas but the same is evident in urban areas too. The urban slum dwellers
most of whom are migrant labourers do not have access to banking financial
services. An especially designed remittance facility for the urban poor was
introduced by the Bank, wherein, the facility to remit money to the family at
distant villages at an affordable charge in a safe and secure manner on T+1 day
delivery terms was provided at the door-step of the customer. For this purpose
remittance corridors have been identified including intra-state corridors.
NEFT transaction through Cards is executed and Card to Card remittance is
The Bank has about 3.5 Lakhs such customers enrolled and till date has remitted
Rs. 564 Crores by undertaking 10.73 Lakh transactions. At present Bank is covering
the money-moving corridors of Mumbai - Eastern U.P. & Bihar, Delhi- Eastern U.P.
& Bihar, Surat - Ganjam, Ludhiana - Eastern U.P. & Bihar,Kolkata –
Bihar/Jharkhand. The Bank will shortly replicate its success into other money
o Financing Farmer Members of Primary Agriculture Co-operative Societies (PACS)
Pursuant to the recommendations of Vaidyanathan Committee, Andhra Pradesh
was the first state to bring modifications in its Cooperative Societies Act so as to
improve the rural credit delivery system. The PACS are not in a position to meet
the demand of the farmer members for cultivation of crops, other investment
finance in agriculture. Consequently the farmers are accessing informal sources
like moneylenders.The State Government decided to constitute PACS as ‘hubs’ to
enable financial inclusion of rural citizens. It appointed Co-Options Technologies
Ltd as a Technology Service Provider for implementation of basic services at all
the 2700 PACS functioning in the State.
Since Co-Options has invested in computerization of PACS, they have been
permitted to develop business for PACS, use the PACS as their agents for various
business services and source funds for PACS members for 10 years.
Our Bank has taken up a new initiative of financing farmers of Primary
Agriculture Co-operative Societies (PACS) in the State of A.P.through M/s
CoOptions Technologies Ltd Solution (COTL). CoOption provides to the Bank
solutions which can track credit history of members of PACS and the Bank has
option to fund those who have good credit history. Co-Options solution to the
Bank envisages sourcing farmer, undertaking due diligence, disbursement and
recovery of dues. The sanction of loans is vested with our Branch Manager.
A Pilot was initiated in Nizamabad District of A.P for Rs. 2.00 Cr. Later on this
was extended to Chittoor and East Godavari districts with corpus of Rs. 20.00 Cr
for crop loans and Rs. 1.00 Cr for Vehicle loans called Kisan Chakra.
Since the Pilot is successful,we would be scaling up the project across the state
and have approved an outlay of Rs 500.00 crores.
7. PAYMENT OF WAGES: Under NREGA and Pension under SSP
A major increase in the biometric based operations took place with the bank's
initiative to facilitate the payment of wages to thousands of poor daily wage earners
under GOI's flagship socio-economic programme, Mahatma Gandhi National Rural
Employment Guarantee Programme. The bank has extended the facility to more than
2.7 million beneficiaries in Andhra Pradesh, Kerala, Madhya Pradesh, Chhattisgarh,
Haryana, Jharkhand and Kerala through Biometric Cards and disbursed payments of
about Rs 803 crores. Right amount of wages are paid to the right person at their door
steps promptly. Similarly Bank also routes Social Security Pension to the aged
8. FINANCIAL LITERACY:
In the process of putting the Financial Inclusion in mission mode, we have
learnt that it is more important to create awareness about the usage/benefits
of financial services than mere providing access to these services.
Taking this learning in its stride, the Bank has opened 201 Village Knowledge
Centers, 13 Rural Self-employment & Training Centre and 8 Financial Literacy
& Credit Counseling Centers across the various parts of the country.
These centres provide the basic financial education to the educationally un-
privileged customers so that they can make a more informed decision with
respect to asset allocation and do not fall prey to the greedy hands of local
The target group for financial literacy would be school children, women and senior
citizens. The VKCs disseminate knowledge about banking apart from developments in
the field of agriculture.The financial education/awareness is spread as under:
Holding Village Awareness campaigns in villages.
Specially designed posters and pamphlets are provided to branches for
display at BC points and community areas.
Nirtya-natikas, Road shows and Muniyadis are arranged in villages;
Audio-visuals on financial literacy are played at Farmer’s Club meetings;
Under project ‘CHETANA’, financial literacy programmes and audio-visuals
projecting bank’s efforts in the space of financial inclusion beamed in
selected rural branches and VKCs;
As yet another initiative towards creating awareness among rural masses,
Bank has come out with three comic books in Hindi language ‘Surakshit
Bhavishya’, on Deposits ‘Kushaali’ on Loans and ‘Swayam Sahayata
Samooh… Aatmanirbharta ki ore’ on SHGs.These books were released by
Hon’ble Finance Minister Shri Pranab Mukherjee at a function held in
Mumbai in May 2011.
9. VILLAGE KNOWLEDGE CENTER:
Bank has established 202 VKCs entrusted with the following role:-
Hold awareness camps in villages to educate people on the benefits and
necessity of banking
Canvas micro-loan products
Sanction micro-loan proposals canvassed by BC and monitor the loan
Taking initiatives for development of Union Adarsh Gram.
Monitoring BC working aspects like cash management, reconciliation and
liasoning with Govt. authorities
10. SPECIALISED FINANCIAL INCLUSION BRANCH:
The BCs are the face of the Bank as far as the FI customers are concerned. Therefore,
Bank needs to be conscious of reputational risk that might arise due to wrong doings of
BC. Thus, one of the important aspects of ensuring good customer service under
branchless banking is close monitoring of the working of the Customer Service
Points/Business Correspondents. To do the same, Bank came out with the concept of
Specialized FI Branch.
A Sp. FI Branch is a small brick and mortar model intermediary between Bank and the
customers in remote villages. It is a single officer branch to which the allotted 2000+
population villages and identified less than 2000 population villages is attached in such
a fashion that a single Sp. FI Branch would monitor the working of 20 CSPs. The
primary role and responsibility of Sp. FI Branch are as follows:
Responsible for implementation of Financial Inclusion projects at the
To garner business through CSPs;
Ensure that every eligible person in the assigned villages have a bank
To ensure KYC and AML compliance at the time of account opening;
Sanctioning of loan proposal brought by CSPs after due-diligence;
Custodian for all documents for accounts opened and loans sanctioned
Hold awareness camps in villages;
Issuing and updating of passbooks of FI customers;
Ensure proper cash management practices taken up by CSPs.
11. UNION ADARSH GRAM YOJANA:
As a part of its commitment to nation the Bank has launched “Union Adarsh Gram
Yojana” by adopting 104 villages across the nation for their all round socio-economic
The objective of “UNION ADARSH GRAM” is to adopt backward villages coming under
the command area of our rural and semi-urban branches in order to do socio-economic
development of the villages enriching the lifestyle of the villagers. The scope of the
Scheme extends to several activities through involvement of the Bank in various social
economic development programs launced by the Central, State Governments and Local
self Government bodies.
The Bank plays the role of an intermediary between villagers and various village
development agencies. The Village Knowledge Centre plays an important role to
achieve this goal. Credit needs of the whole village are being met by our bank aiming
at a meaningful Financial Inclusion.
Apart from converting 100% banking habit village, Bank’s focus has been to ensure that
funds granted to the village development are utilised for bringing about the results
envisaged under various schemes.Under Union Adarsh Gram Yojana, the Bank’s
endeavor is to make the villages self-sufficient and self-sustaining in every aspect.The
developmental activities are undertaken for:
Upliftment of all the BPL families in the village to Above Poverty Line.
Financial Inclusion for all by making the village 100% Banking Habitat Village and
Credit Linkage of all the households with the bank
Increasing the Literacy rate by helping in getting quality education to children.
Making available drinking water and sanitation facilities to all the residents.
Spreading knowledge about healthy living practices and healthy living conditions.
Increasing Agricultural Productivity by making farmer’s aware of new agriculture
practices and updating about the market prices.
Other Infrastructural developments like building weather resistant roads, having 24
hr electricity, availability of school and hospitals.
Providing vocational training for generation of new sources of income.
Adoption of One Girl Child in each of the UAGs to help a needy and meritorious girl
child with financial aid for completing studies till Std. XII atleast.
The Bank now has 103 villages covered under the scheme.As of end of June, 2011
about 69 of the UAGs have been made 100% Banking Habitat Village with continuously
increasing amount of loans advanced.
12. UIDAI Project.
The Bank is associated with UIDAI Project in a big way. Initiatives taken are as under:
To act as Registrars for enrolling citizens under UIDAI and opening bank
accounts of those enrolled beneficiaries who do not have one;
Linking the existing accounts of customers especially recipients of Govt.
payments with Aadhaar during enrollment itself;
4.2 crore citizens are to be enrolled under Aadhaar,
Undertaking enrollments of existing/prospective customers in various regions/
Union Adarsh Grams/ FI villages;
Districts with exclusive projects like MGNREGA/SSP, NDDB payments and Bank’s
Lead Districts are targeted for allotment.
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FID /UBI/ July 2011