In accordance with its policy of financial inclusion, some time ago the Government of India issued a notice that all villages with a population of over 2,000 should be provided with banking services. With this, the government planned to help the labor classes in urban areas by creating corresponding banking points for their families in rural areas. The government also hoped to create a banking culture among the rural masses.
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With over 23,000 branches, the State Bank of India (SBI) viewed this government notice as an opportunity to reduce congestion at its branch offices, and improve service quality for its customers. This led to the deployment of Web-enabled kiosk banking by SBI.
SBI’s kiosk banks have the facility of cash and check deposits, while their withdrawal actions are similar to those of an ATM. Existing customers who are not enrolled for kiosk banking may also use the system for cash withdrawals and deposits. The SBI kiosk banking system reduces the account opening costs from Rs 200 at a branch office to Rs 20 at a kiosk terminal.
The SBI system puts retailers in charge of kiosk terminals. Each retailer gains monetary benefits by way of commission. Every savings account which is opened earns the retailer Rs 10 and every transaction 0.5% of the transacted amount. The initial setup costs a retailer Rs 30,000, and the system is ready for use within 24 hours.
There is a certain process to follow for opening an account. The kiosk banks —which employ six languages for transaction needs—use biometric scanners for identity verification of the account holder. To open a zero-balance savings account, the account holder will have to provide a digital photograph—which could be taken at the kiosk banking setup itself—along with address and photo-identity proof. Since this is a special effort to inculcate a banking culture in the rural and lower-class urban masses—who may or may not have adequate documents in order—a letter by an authority (such as the sarpanch) suffices as identity proof. Plans are in progress to incorporate the identity verification (via the biometric scanners) into the government’s unique identification (UID) database.
The kiosk banking system is prepaid, and thus the retailer may only allow for transactions within the particular paid up amount. The money obtained from the transactions becomes his working capital up to the limit of the prepaid amount. The account limit is Rs 50,000, and the daily transaction limit is Rs 10,000. If kiosk banking customers exceed the Rs 50,000 limit, they will have to go a branch office and transfer the money to a general savings account.
To make these transactions, although the retailer has access to the SBI core banking system (CBS), this access will be limited to the kiosk banking CBS. A growth in the kiosk banking customer base will imply a growth in SBI’s database. SBI intends to extend its current services to this new customer base; the only separation on this front is in its data center location. While its all-India data center is located at CBD Belapur in Navi Mumbai, its kiosk banking data center is situated at Chennai.
According to SBI spokespersons, Internet connectivity and electricity are the retailer’s responsibility. The kiosk banking setup providers arrange for a 1 KVA UPS which suffices for almost 20 minutes of backup time, so that any transaction in progress can be completed.
SBI’s kiosk banking implementation roadmap
In July 2010, SBI’s kiosk banking service provider Oxigen undertook a successful pilot project in Delhi. The vendor was an obvious choice for this initiative, since Oxigen is already an established player in prepaid kiosk services. However, SBI has not put any restrictions in place when it comes to employing kiosk banking services from other vendors.
In Mumbai, SBI already has 50 kiosk banking centers set up by Oxigen, Ambika Credit Society and Satyam-Sify. SBI plans to open 500 point-of-sales terminals by March 2011 and 5,000 by March 2012. For this, it aims to engage over 500 business correspondents all over India.
A few of SBI’s other service providers for kiosk banking include Mainstream Solution & Education, FINO (Financial Information Network & Operations) and Little World (providers of biometric scanners). Meanwhile, SBI is looking for business correspondents to carry the kiosk banking model to all parts of the country.