Magazine 75

BANKING ON THE UNBANKED

Providing last mile connectivity in the inaccessible areas across the country, is a key focus of Punjab National Bank, shares K V Brahmaji Rao , Executive Director, Punjab National Bank, during a tete-a-tete with Vishwas Dass and Souvik Goswami of Elets News Network (ENN )

K V Brahmaji Rao

K V Brahmaji Rao
Executive Director, Punjab National Bank

Please tell us how Punjab National Bank is contributing to make the Government of India’s Financial Inclusion programme a huge success.

Punjab National Bank has been partnering with the government and has been working shoulder to shoulder for social and economic upliftment of the country. This can be seen from the fact that as on 31.10.2015, out of 6,314 branches, our bank has 2,625 rural branches, i.e. 41.57 per cent of our branches are in rural areas. Besides, the bank is also providing financial services to the last mile through more than 8000 Business Correspondents (BCs) employed in the remote areas of the country. PNB implemented the Pradhan Mantri Jan-Dhan Yojana (PMJDY) in a mission mode and opened 1.19 crore accounts till 18th November 2015 which is the highest among the Nationalised banks. On inclusion of the performance of PNB sponsored Regional Rural Banks, the number of accounts opened under PMJDY increases to 1.50 crore. The BCs are using Hand Held Tools (HHTs) which are seamlessly integrated with the main server of the bank. The bank is also working towards offering inter-operability within BC agents that would facilitate the FI of customers wherein they can access all the services required by them at their own location in real time. “Banking for unbanked” is a mission of Punjab National Bank. The bank has made a humble beginning towards its pursuit of an inclusive growth strategy to achieve financial inclusion by ‘reaching the unreached’. The services of BCs were being utilised to identify the beneficiaries as well as managing the Point of Sales (POS) centres where the Hand Held Devices were operated for providing banking services. The bank believes that financial education and awareness is one of the most important ingredients of financial inclusion in the country. Hence, the bank has been conducting financial awareness campaigns, publishing posters/pamphlets and providing counselling to the people in rural and remote areas for promoting financial inclusion. Through the e-KYC process, accounts of the customer having Aadhaar number are opened through biometric authentication from UIDAI database. This product has been operationalised and 56.6 lakh accounts have been opened up to 21.11.2015.

The Aadhaar Enabled Payment System (AEPS) is operational and working successfully. Kiosk Banking Solution a web based solution has been deployed at BC locations in our bank. At present all our BCs are working under KBS and providing the services of i) Enrolment/ opening of accounts ii) Cash receipt/deposits iii) Transfer of funds/ intersol transactions iv) Balance enquiry. The Micro ATM machines with interoperable transactions facility are proposed to be deployed shortly at BC locations.

K V Brahmaji Rao-2How important is PMJDY for implementation of financial inclusion?

Financial inclusion is the programme of inclusion of hitherto financially excluded sections. PMJDY is visualisation of extending the basic financial entry to the excluded household into the formal financial system of the country.

Till August 2014, of the 24.67 crore households in the country, 10.19 crore did not have access to banking services. In rural areas, 44 percent households and in urban areas 33 percent did not have a bank account. Hence, PMJDY was announced by the Hon’ble Prime Minister on August 15th, 2014 as a national mission for taking formal financial services to more than 7.5 crore unbanked households. Till 18th November 2015, 19 core bank accounts have been opened by all the banks under PMJDY. The target given by the Government of India to all the banks whereby they were supposed to open one account per household latest by 26.01.2015 was achieved barring a few areas of J&K and some extremist affected areas. PNB’s contribution stands at 1.19 crore accounts (1.50 crore including PNB sponsored RRBs) during the same period.

Its importance not only lies in providing a bank account to every family but also in inculcating the saving habits among the people. PMJDY comprises of the following six pillars:-

  • Universal access to banking facilities
  • Providing basic banking accounts with overdraft facility and RuPay Debit card to all households
  • Financial Literacy Programme
  • Creation of Credit Guarantee Fund
  • Micro Insurance

The PMJDY is a scheme that aims to provide all the citizens of India – especially the poor masses – a bank account, credit facility, insurance cover and debit card. The scheme will also allow the poorer sections to avail subsidies and overdraft facilities through their bank accounts which are intended to eliminate money-lenders, commission agents and corruption. In the long-term, this scheme will also provide the backdrop for a cashless economy – another focal point of the Prime Minister’s dream of Digital India. Hence, PMJDY can be termed as the main driver of financial inclusion in India.

Please elaborate on how technology has been adopted by your esteemed bank to give financial services to the customers.

PNB is the early adopter of technology and market leader in providing technology-driven, customer-centric products & services. All the branch operations are performed through Centralised Core Banking Solution (CBS) (Finacle of M/s Infosys). This has enabled the customers to transact from any branch. With CBS; customer has become the ‘Customer of Bank’ and not necessarily of the branch only. PNB’s web-based internet banking, mobile-based mobile banking, SMS banking enable the customers to undertake all their transactions from anywhere at any time. It is truly 24*7 banking at their fingertips.

PNB with over 8600 ATMs provides free cash withdrawal facility to vast pool of Debit Card holders. The A TMs also facilitate inter-bank transactions, tax collections etc. The bank’s technology enables customers to meet all their financial service requirements including tax payments & e-com transactions. The secured technology environment ensures easy to use operation while providing multi-layer security like encrypted data transmission, unique user ID/ password for login, additional password for transaction with additional factor of authentication like OTP & adaptive authentication. Every channel transaction is intimated to the customers through SMS bringing in the desired confidence. PNB’s technology ensured standardised delivery of financial services to all the customers across all the channels, be it branch, banking correspondents’ location, ATMs, Internet banking or mobile banking. The unified customer grievance redressal mechanism ensures prompt redressal of grievance referred through web/ contact centre/branch. A dedicated team constantly works for up-gradation of existing technology products and to introduce new and innovative products to ensure that the customers remain served with the latest technological products .

What according to you are the main challenges for financial inclusion?

The main challenge for the banks in implementing the financial inclusion drive is the volume of operations in the accounts opened under PMJDY. The second challenge is the low financial awareness and need for educating the people of the rural area. Though the people are increasingly becoming financially educated, it will take some more time and effort on part of the banks, regulator and other stakeholders.

Following are the main challenges for financial inclusion:

  • Duplication of A/C opening
  • Low/Nil transaction in accounts and high percentage of zero balance accounts
  • Connectivity issues particularly in hilly area and remote places
  • Distribution and activation of RuPay cards
  • Financial illiteracy

The unified customer grievance redressal mechanism ensures prompt redressal of grievance referred through web/contact centre/branch

The banks are taking different measures to meet those challenges. By conducting financial literacy campaigns and counselling, the banks are trying to increase the financial awareness of the people especially in the remote areas. Apart from that, the banks are digitalising the process of offering financial services in the distant rural areas. With the government’s initiative to transfer of funds under the social welfare schemes directly to the beneficiaries bank accounts, business viability for the banks in such accounts will improve. Apart from understanding and engagement of beneficiaries, banks are integrating banking with seamless technology to take the benefits of financial inclusion to the last mile in the country. It is the reason that you see today strong bonding between banks and financial technology companies in furtherance of financial inclusion.

With gradual increase in the transactions by the customers in rural areas, their trust on the banks will build up and then the banks will be able to cross-sell their products to them.

PNB appoints BCs in the remote rural areas who are directly linked to the main server of the bank which makes the transaction seamless and real time. This is also a cost-effective channel for the bank. The bank is also conducting financial awareness campaigns to educate the customers and encourage them to make more and more transactions through the bank accounts. The bank is also in talks with the upcoming payments banks to offer banking services in the rural areas.

Please shed some light on the future initiatives to be taken by PNB for providing financial services?

The bank is working on creating digital platform to extend multi-channel seamless transactions for the customers by integrating Internet banking, mobile banking, core banking & contact centre. The emerging strength of social media is proposed to be utilised for positioning brand PNB & offering products & services. Already bank has established its presence on Twitter.

Some of the initiatives which are under consideration of the bank are:

  • Customer’ s acquisition through online web services and from their doorstep using tab banking services
  • Introduction of off-site e-lobbies with self-operated cash deposit
  • Machines, cheque deposit machines, passbook updating machines, ATMs & internet kiosks with purpose of providing banking on 24*7 basis

The digital platform with end to end retail loan acquisition & approval based on score-based model

  • PNB Wallet
  •  PNB Youth Banking – Mobile App
  •  Mobile App
  • ATM Assist Mobile App
  • Cardless cash withdrawal

What is your vision for PNB?

Punjab National Bank is one of the largest Public Sector Banks of the country with a vast customer base and more than 6500 branches throughout length and breadth of the country. The bank envisions to be the household brand of the country i.e. the bank that responds to the needs of customers in the way they require. The vision also encompasses to march ahead efficiently in the market by digitalising its processes and products. The bank will strengthen and reorient the human resources and promote sales culture so as to make it a “Super Smart Bank”. Digitalisation of the banking products and process will make the bank as “the bank for the youth.” I also dream Punjab National Bank to increase its global footprints and become a global brand. While expanding, significance to the strength and soundness will always be at the core of the business strategy. The bank will continue to remain a socially responsible bank for the sovereign and compliant bank for the regulator. The trust of stakeholders is thus envisioned to grow further with the aforesaid path.

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