Creating access to financial services for unbanked and underbanked sections of the society using ICT – ICICI Bank Ltd

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    Project Category: Governance
    Sub Category: Financial Inclusion Initiative
    Reference No: eindia2013/awards/416

    Details of Programme /Project/Initiative:

    Brief Description:

    Access to formal financial services is a key element in the process of socio-economic empowerment and poverty alleviation. However, when considered that about half of the India’s population does not have a savings bank account and only about 35,000 out 600,000 villages have commercial bank branch. It’s a great challenge to reach out to this large unbanked population and specifically when they are in far flung areas those lacks even the very basic infrastructure facilities such as power, connectivity and roads.
    Therefore, considering the challenges of last mile reach, a technology-based model was not “an” option, but the “only” option. Here the Bank has invested its resources – monetary as well as human – in creating the Information Communication Technology (ICT) based solutions to take banking services to unbanked in urban and far flanged rural areas.
    The ICT based solutions uses the Micro-ATM (POS machines) or mobile phone to facilitate the Banking transactions. The Bank open accounts for govt scheme beneficiaries and each account holder is issued a smart card which contains the biometric template of the customer’s fingerprint. This card also acts as e-passbook and contains details of the last ten transactions and current balance of the accounts. Micro-ATMs machines are used to verify the details on the card and authenticate the customer, based on his fingerprints stored on the card and the transaction is carried out. These Micro-ATMs works on mobile technology and can be operated without wired connectivity allowing them to function at customers locations.
    Recognizing the contribution made in financial inclusion by usage of ICT, the Bank has been recently awarded at various events including the “Best Bank in the Financial Inclusion Initiative” at Indian Bank’s Association (IBA) Technology Awards in 2012 and in “Best Financial Inclusion Initiative of the year” in corporate category at eMaharashtra Summit in 2013.


    For over five decades, the ICICI Group has partnered India in its economic growth and development. Promoting inclusive growth has been a priority area for the Group from both a social and business perspective.
    ICICI Group seeks to combine a sustainable business model with a social and human development agenda to provide access to financial services to the un-banked and the under-banked sections of the society.
    The strategy is focused on creating an ecosystem that serves four principal objectives:
    •Facilitating access to basic financial services to un-banked and under-banked
    •Creating complementary and facilitative infrastructure to enable banking services delivery to un-banked and under-banked
    •Improving the efficiency of financial systems to address the needs of target group
    •Provide market access to un-banked and under-banked by bridging the gaps in knowledge, infrastructure and product availability

    Target Group: Un-banked and under-banked such as farmers, farm labourers, old age people, urban migrants, workers in small units and many more in rural and urban areas.

    Geographical Reach within India:

    Under various models the Bank has reached out to about 14,000 villages and opened about 150 lakh accounts for unbanked and under-banked individuals on Pan-India level. In the state of Andhra Pradesh alone the Bank has opened about 23 lakh accounts and providing services across about 6,000 villages.

    Geographical Reach outside India:

    The Bank is part of a project for studying and developing useful formal savings products for poor households in developing countries. The project is done under the aegis of Bill & Melinda Foundation and Gateway Financial Innovations for Savings (GAFIS), this project is conducted with 5 participating banks across 3 continents. ICICI Bank is the only bank from Asia.

    Date From which the Project became Operational: 7-3-2010

    Is the Project still operational?: yes

    Five points that make the Product/Programme/Project/Initiative/School innovative

    The Bank has been constantly striving for providing better and appropriate services to target groups and with that agenda has adopted various means to provide these services. A few of these innovations are listed below,

    1. Financial Inclusion through mobile based platform: Under the mobile based platform, the Bank is using the mobile of the customer as the key medium for authentication and transactions. The model is agnostic to the telecommunication technology/service provider. Under the Global System for Mobile (GSM) network the services can be availed by the customer on Unstructured Supplementary Services Data (USSD) platform, whereas in the case of Code Division Multiple Access (CDMA) network, the same services can be availed by the customer through Short Messaging Service (SMS).

    2. Partnering with Unique Identity Authority of India (UIDAI) : The Bank has successfully launched DBT using the Aadhaar Platform on the APBS, NACH and AEPS platform.

    3. Urban to Rural Remittances : To make the process of enabling seamless remittance services for the urban migrant population, there is a three tier tech architecture developed:
    i. Front end: The front end application available at the Merchant/remittance point either on a mobile phone or a PC/laptop captures all the mandatory details for enabling remittances.
    ii. Aggregation at the BC: All these requests captured at the Merchant/remittance point are integrated real time by the BC and wallet account of the Merchant/Remittance point is online debited.
    iii. Host to Host Integration with Bank: The BC has a Host to Host integration with the Bank server and the transactions are picked up near real time and NEFT out transactions processed.Responses are also posted through Host to Host and the entire process automated, with no human intervention.

    4. Real time micro ATM integration: The Bank has implemented an online channel for FI accounts. Now, the transactions are directly processed on the Bank’s CBS. The same has smoothened the flow of transaction in the accounts and makes real time balances available on field. Effective scale of this model will depend upon the availability of level of connectivity and other requisite infrastructure in other states. The Bank is in process of doing a phased migration to the online channel based on the connectivity and number of accounts.

    5. Linkages with corporate and cooperative entities: Going beyond government tie-ups and engaging with non-government entities and facilitating the vendors, members, associates and employees of corporate and cooperative entities for facilitating payments of wages, fees, farm and forest produce seamlessly and efficiently. Deliverance of services has benefited the entire ecosystem also provided the users with readily available savings option with the Bank closer to them.

    Five key achievements of the Product/Programme/Project/Initiative/School

    1. Govt to Citizen Payments: The Banks is among the leading service provider for government scheme benefits disbursements in the state of Maharashtra. ICT enabled solution provides robust, prompt and secure mechanism to disburse the government scheme benefits. The Bank in association with Department of Social Justice launched the ICT enabled payment solution for SSP payments and payments solution of MGNREGS wages across 8 districts in the state including 2 urban centers. Under both these schemes cumulatively the Bank has facilitated disbursements of over Rs. 1,000 crore in the state of Andhra Pradesh. The Bank with its effective system has been disbursing the benefits on time and even refunding for no disbursed funds thereby saving time and cost for concern departments.

    On Pan-India since the inception of payment solutions the Bank has disbursed over Rs.1,250 crore under various the schemes. The implementation has been done across the various schemes including Social Security Pension (SSP), Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Payments for ASHA workers under National Rural Health Mission (NRHM), Scholarship payments and many more schemes.

    2. Direct Benefit Transfers: The Bank has successfully launched of Direct Benefit Schemes (DBT), and is among the first few banks to implement the Aadhaar enabled government benefits payments in country. Also the Bank has successfully implemented the NACH for facilitating Direct Benefit Transfers. Leveraging this integration, the Bank has sponsored 98,028 Direct Benefits Transfer (DBT) transactions worth ` 90.3.
    In the state of Maharashtra, the Bank has launched Aadhaar enabled payments for NRHM at an event chaired by UPA chairperson Mrs.Sonia Gandhi and hosted by Department of Health attended by Chief Minister of Maharashtra and Union Health Minister. Additionally the Bank had SSP and NREGS payments were demonstrated at DBT inaugural event attended by Union Minister for Rural Development Mr. Jairam Ramesh at East Godavari. The Bank had received a letter of appreciation from the district administration for the same. SSP payments have been scaled to 22 Gram Panchayats in East Godavari. There are various schemes in pipeline those will be rollout on this platform.
    3. Wage Solution: There is large population of migrant workers comes to metros to earn their livelihood and Mumbai has a significant number of migrants. However, due to lack of KYC (Know Your Customer) documents these migrants are left out of formal banking channel. Recognizing the needs of these individuals the Bank has launched Wage Solution for workers in unorganized segment addressing one important need that is “receiving timely and secure payment of salary”. The Bank has provided about 31 lakh such wage solution cards. These cards can be used on vendor points to buy products and services, at ATMs for cash withdrawals.

    4. Deepen the reach of basic banking services and provided access to many. As at May 31, 2013 on pan-India the Bank has provided basic banking services access to about 15.0 million financial savings accounts across about 14,000 villages in 19 States and Union Territories using ICT enabled solutions.

    5. Remittances: Often unbanked, migrants need channels to send money from their locations of work back to their native villages. And due to lack of KYC documentation it becomes difficult for them to use the formal banking channel. Because of inaccessible banking channel, migrants cannot send money home as regularly as necessary.

    Therefore, ICT enabled remittance service of the Bank enables the walk in customers who do not have a bank account to transfer funds to the bank accounts of beneficiaries residing in villages and smaller towns in a swift, secure and convenient manner.

    The services have been rolled out through more than 2,500 Customer Service Points (CSPs) located across 60 major cities. Since the launch of the services in June 2012 the bank has facilitated over 750,000 transactions with a value more than Rs. 240 crores has been initiated.

    Five key challenges faced while implementing the Product/Programme/Project/Initiative/School and how they were overcome

    1. Commercial Viability for Customer Services Points (CSPs) and Business Correspondents (BCs) is a challenge
    Although, there have been efforts to create awareness among the target groups through financial literacy programmes, low financial literacy amongst target segment, leading to lot of accounts being inactive and even if there are transactions those are of low value. Under other modes where there are beneficiaries of different government schemes there the transactions are low in value and high in volume making that process operationally intensive business and non commensurate remuneration making it commercially difficult proposition for subsistence of CSPs and BCs.

    2. Limited availability of quality man-power:
    Although, ICT led solutions have helped in bridging gaps and providing banking services in unbanked areas. There remains a major concern that is availability of quality man-power delivering the services at customer level.

    3. Limited financial literacy and awareness:
    Financial literacy is an important element in this direction in inculcating savings habits and conveying benefits of other financial products. However, it is not easy to prompt the account holder to keep using services even when they are inducted in the formal banking services. To address this issue the Bank has done product information literatures in local vernacular languages, and also made a video film explaining the benefits of banking and also regularly conduct village level meetings to facilitate customer interaction.

    4. Limited infrastructure and local support poses a challenge for scalability of banking services
    In various states the Bank worked along the concern to iron out the issues in system and process of collection and maintenance of beneficiary data. The Bank also conducted various meeting with block level and village level officials to create awareness and sensitize them about the systems and processes of ICT enabled payment solutions. This approach largely worked in addressing the gaps in support at ground level.

    5. Limited technology adoption and know-how of among the ecosystem partners
    The Bank continually engaged with government officials and beneficiaries at various levels and forums to create awareness about the ICT enabled solutions. This helped in improving the acceptability of method of benefit disbursement, and shown significant improvements in number of beneficiaries paid through ICT enabled solution using bio-metric authentication.

    Five points that make the Product/Programme/Project/Initiative/School replicable

    1. Availability of basic banking products not only helps in securing futures but also enables unbanked to maximize growth opportunities

    2. Banking channel proves to be efficient and economical to facilitate disbursement of government benefits

    3. ICT enabled banking solutions improves accessibility & affordability of banking for unbanked people

    4. Local partners as CSPs creates revenue generation opportunities for CSPs at their villages

    5. Financial literacy helps in making better financial decisions & secure financial future for unbanked

    Five points to elaborate on the scalability of the Product/Programme/Project/Initiative/School

    1. Light on Infrastructure & ICT enabled solutions helps in speedy implementation in rural India: Establishing operations in a particular geography does not need much of physical infrastructure such as office, staff and others. This makes the operations scalable across multiple locations in a short span of a time.
    2. Simplicity of technology enables basic literate individuals to be associated with programme: Simplicity of technology used for facilitating the banking services makes it easy to a basic literate individual to partner in this initiative. And this eases the scale up of the operations across the geographies without the hurdles of long term learning curve of associates/Customer Service Points.
    3. Latent demand for financial services from unbanked result in quick and wide acceptance: Target group is already aware about the benefits of banking services and products and have a latent demand for it. The fact is that it’s only the availability and accessibility which limits the realization of this demand, and this makes the entire concept scalable.
    4. Policy and regulatory guidance and facilitation helps in implementation: Policy and regulatory guidance and facilitation are becoming more and more congenial and steering for the development of banking facilities in areas those have been devoid of banking services till now.
    5. Acceptance of banking channel as a mode of disbursement of government benefits: Transition from conventional manner of government scheme benefit disbursements to using the banks as channel with a fee is making financial inclusion as a business proposal. Although these commercials do not make the operations as a lucrative proposal but are sufficient in meeting the expenses. This is bringing positive shift in the ecosystem partners and easing the lot of challenges related to scalability.


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