NACH Debit – India’s ePayment Highway for Digital Transactions

          It is said that numbers do not lie and the numbers say everything. The below are the number of Banks on NPCIs’ NACH Debit platform.

 

ACH Debit Banks
CO-OP	188
FOREIGN	16
LAB	1
PRIVATE	19
PSB	21
RRB	8
Grand Total	253

 The first ACH debit transaction was executed in July 2013 with 88 transactions. Within a span of 20 months the volumes rose to Seven lacs +.

There has been tremendous growth in the last six months. Month on month, there is an increase of 1,00,000 transactions.

 

ACH Debit Volumes
Sep-14	Oct-14	Nov-14	Dec-14	Jan-15	Feb-15
252657	337578	419165	509293	595553	719400

 There have intense discussions amongst NPCI, Banks and Billers on the ways and means to increase safe ACH Debit transasctions.

 

Billers are building products designed to take the best of NACH Debit.

The mutual fund industry is quickly adapting to the NACH Debit platform to encourage investors to move funds from their bank accounts to the mutual funds in a safe manner.

In the next couple of  months, a large number of billers are expected to sign up on the NACH Debit Platform.

The primary infrastructure has been stabilised and the system has enough capacity to handle more than 10,00,000/- transactions per day.

Billers are also gearing to flash a number of alerts to ensure a high success rate.

NPCI has removed 4 irrelevant return codes from the NACH Debit platform. The four codes are

a)     No such account

b)    Account description does not tally

c)     Mandate not received/UMRN does not exist

d)    Invalid Account(NRE/PPF/CC)

 

Student Scholarship Bank Accounts should be eligible for PMJDY Overdraft

 

Over 10 crores of PMJDY accounts have been opened in bank branches all over India.

PMJDY Bank accounts have been opened in public sector bank branches as well as private sector bank branches.

The immediate priority of the stake holders is to reduce the % of Zero Balance accounts in the PMJDY bandwagon.

Routing Direct Benefit Transfers (DBT) including LPG subsidy is the preferred method to stimulate transactions in the PMJDY accounts.

Insurance coverage – both accidents and life, is another tool to keep the transactions flowing.

Another attractive feature is the INR5000/- clean overdraft facility.

The overdraft comes with lots of strings attached. The first set of PMJDY accounts will be eligible for OD facility after a couple of months.

As there is no precedent for mass clean overdrafts in the banking industry, the initial conditions are stringent.

India has a rich tradition of student scholarships. A large number of scholarship schemes are available for students in India. Both Central and State agencies offer scholarships. Private trusts too offer scholarships.

Majority of the scholarships are disbursed to the respective bank accounts. It is almost mandatory for students to have bank accounts.

scholarshipsinindia.com website offers good details of the various types of scholarships available in India.

momascholarship.gov.in displays the type of scholarships accessible to minority students in the nation.

10 reasons as to why the PMJDY Overdraft facility has to be offered to students too:-

a)     All scholarship amounts will be credited to such accounts.

b)    Calculation of the eligible overdraft amount is easy, as there will be scholarship credits.

c)     Increase the catchment populace of PMJDY OD accounts.

d)    Inculcate financial discipline amongst students.

e)    Credit report can be easily built at the time of processing education loans in future.

f)     Students can adopt batch of OD accounts in their locality and guide them for efficient utilisation of OD limits.

g)    Increase the visibility of PMJDY scheme amongst the public.

h)    Increase loyalty to the ruling party, which can be redeemed at the time of elections.

i)      Tool to reduce the number of Zero Balance Accounts.

j)     No additional investment in terms of infrastructure required. Only correct mapping required.

 

 

 

v

PMJDY Overdraft process should be fully digitised. No Paperwork please

The detailed guidelines on the overdraft process for PMJDY accounts has been hosted on the PMJDY website.

The players involved in the overdraft process are the Bankers, account holders and government functionaries.

As this is the first time that such a massive overdraft program without any collateral is being rolled out, the process is completely through Paper applications.

There is much scepticism  in the social media that this would be a failure and there would be huge defaults by the PMJDY account holders.

In my belief, we Indians especially the marginalised class are trustworthy and the defaults would be minimum.

Adequate safeguards have been built in the process to ensure that the account holder can be tracked in the banking sector.

 The overdraft facility is available only to Aadhaar number holders. NPCI has built a repository wherein the PMJDY account and the Aadhaar number is linked. Once an overdraft is granted in an account, appropriate flagging is done in NPCI database.

This flagging in the database ensures that no multiple overdrafts are allowed in the same PMJDY account.

A process review after 3 months would be great. The whole process should be digitised, with out the need for paper forms.

Below is the proposed process flow:

01) Any PMJDY account with credits from DBT/DBTL Scheme/scholarship/verifiable sources should be eligible for the overdraft facility.

1. The overdraft facility tobe a) 4 times of the average monthly balance b) INR5000/- whichever is lower.
2. PMJDY holders can approach any branch of the bank where the account is held. No need to approach the base branch only.
3. The OD request to be attested through Aadhaar finger-print verification. No need to fill in any forms or provide any income certificate.
4. The respective bank branch officials to validate the request digitally only. No paperwork is envisaged.
5. Once the bank branch officials authorises the transaction in the CBS (Core Banking System), the overdraft facility to be enabled.
6. System to generate alerts in case there are no credits for 30 days.

Digital India - mPOS ( mobile point of sale) – Should it made compulsory for Indian Insurance Agents to carry it?

The success rate of insurance premium collections depend on the mode of the collection. Currently, the most popular mode of insurance premium collection is Cash or Cheques.

 Slowly but steadily insurance premium collection through eMode. The eMode channels are a) Net Banking b) NEFT c) RTGS d) IMPS e) POS Terminals at insurance company offices.

Not all insurance companies prefer eMode, as there is a direct transaction cost involved in completing the transaction. Hence, they still prefer traditional premium collection premium modes like cash or cheques.

 A detailed study between the traditional modes and eModes show that eModes are superior.

Benefit's of premium collection through eMode:-

    01)Immediate credit of the premium.

1. Offers end to end electronic tracking of the transaction.
2. Premium can be collected any time, any where.
3. Reduction of fraudulent log-ins especially during the end of the quarter/month.
4. Reduction of misappropriating cash premiums
5. Reduction in TAT of issuance of policies, where the premium is collected through cheque
6. No fear of cheque bounce i.e no need to issue provisional premium certificates.
7. No need to follow with the bankers for status of the outstation cheques.
8. Reduction of risk ratings of the policy holder.
9. Ease in checking the insurable interest of the payer.

Pain of premium collection through cash:-

a) Movement of physical cash from the collection point to the bank.

b) Reconciliation of balances between the collection point and the collection bank.

c) Replacement of mutiliated notes.
d) Replacement of suspected fraudulent notes.
e) High TAT to process cash transactions.
f) High carbon print to complete the cash processing cycle.

Pain of premium collection through cheques:-

1.  Movement of cheques from the collection point to the collecting bank.
2. Ensure that the cheque is not damaged during movement at various levels.
3. Ensure that the return cheque if any, is safely received and the provisional premium receipt is cancelled.
4. 1. Ensure that outstation cheques are collected without major delay.

Q) What is mPOS?

Ans: Searchcio defines mPOS ( mobile point of sale) as a smartphone, tablet or dedicated wireless device that performs the functions of a cash register or electronic point of sale terminal (POS terminal).

In India, during January 2013/ Reliance General Insurance, a subsidiary of Reliance Capital, launched a mobile point of sales (mPOS) solution. This mPOS solution is designed to allow customers to pay insurance premium using a mobile phone. The main objective of the company is to eliminate payment-related delays, errors and frauds with the launch of this service.

The company will provide an external card reader dongle that will convert any GPRS enabled touchscreen phone into a POS terminal.

The Reliance General Insurance Company (RGIC) agents will carry this mPOS device along with their GPRS enabled devices accept premium collection from the customer.

 

Developments in other countries:

Hungary: During the first week of March 2015, Hungarian insurance company Allianz Hungary chose Ingenico Mobile Solutions' mPOS to fully equip the 800 sales agents of its network. By end 2015 all sales agents of Allianz Hungary will have this mobile payment products in their hand. The main aim of this deployment of this mPOS platform is to enable Allianz Hungary commercial agents to secure insurance contract sales whatever the consumer's location, whenever they decide to subscribe for a service.

In India Allianz insurance has a tie-up with Bajaj Group and the company is known as Bajaj Allianz.

02) Italy: JUSP recently announced that it has just signed up one of the world's largest insurance companies so that the company's agents can use the JUSP chip-and-pin mPOS solution with customers. Following a pilot project, 3,000 insurance agents in Italy will be equipped with mPOS devices as they visit customers and will be able to sell and take credit card payments at a customer’s location.

Panna prahabhai – A perfect tool to ramp up NERPAP success rate

In the run up to the Indian National elections in June 14, BJP think tank introduced a novel effective tool to increase the voters turnout on the polling day.

In Indian democracy the winner is the candidate who obtains the largest number of votes. The percentage of total votes is immaterial.

Usually, the Indian political parties appoint pooling booth incharge who are mandated to aim for a large voter turnover on the polling day.

 

The average pooling booth has 1000+ voters. To increase the stickiness level, Shri Amit Shah, BJP National President introduced the idea of Panna Pahari.

 Under Booth Incharge, another level was introduced. These appointees were known as “Panna prahabhai's”.

“Panna”, is a hindi word and the English equivalent is “Page”. Each Panna prahabhai was made inchrage of a Voter List Page. Usually this voter list page had names of 60 voters. The Panna prahabhai had only to focus on this voter population. Nothing more, nothing less.

 

The stratgey was finalised couple of months before elections, and on T-30 days the list of Panna prahabhais was announced. Since the announcment day, the Panna prahabhais only focus was to ensure maximum voter turnover on the polling day.

 This strategy paid rich dividends in Uttar Pradesh enabling BJP to win a large number of seats. Seats which were not on its radars.

 The Panna prahabhais were RSS workers or BJP Workers. However, a large number of non-workers too joined this movement. One reason for this attraction could be indications that successul Panna prahabhais could be suitaby rewarded with non-financial incentives.

The same strategy was adopted in the recent Delhi elections too with varying sucess rates. 

With elections over, this lowest level of touch point has been deactivated. However, in the long run, the Panna prahabhais stickiness tool should be continued and also can be adopted by any political party.

Major success can be achieved if this is marketed in the right way among potential aspirants. The aspirants should be made clear that there are no immediate incentives and can be stepping point for social service. The social service must be made without any expectations.

The focus population too should not be promised heaven. The only promise that should be made is that there will be able to lead a quality life.

Areas where Panna prahabhais can intervene:

Ensuring that the voters complete the National Electoral Rolls Purification and Authentication Programme (NERPAP) program i.e Linking and authentication of EPIC data of electors with Aadhar data.

1. Ensuring that all have access to Bank accounts.
2. Ensuring Jan Dhan Account holders operate their PMJDY accounts regularly
3. Ensuring completion of formalities for PMJDY Overdraft facilities
4. Assisting in PMJDY Insurance formalities

Panna prahabhai can also be called a panna pramukh

Any citizen with minimum time to spare and commitment to spread joy can be a Panna Prahabhai/Panna Pramukh.

Political parties can pitch with basic organisational support. The main advantage they would witness during election time, as the Panna Pramukh would have been in constant touch with his/her focus populaiton. Minimum effort by the respective Panna Pramukh would be sufficeint to motivate them to walk to the polling booth and do the voting.