PM has stressed the role of technology in bringing achhe din. Altimetrik, the company providing the IT platform to one of the biggest banks in India for opening and managing the bank accounts under the Jan Dhan Yojana discusses how IT will facilitate financial inclusion. Abhishek Raval speaks to Madhavan Satagopan, CTO, Altimetrik.
Altimetrik has been running a sizeable pilot in the Tumkur district in Karnataka to enrol villagers for the Pradhan Mantri Jan Dhan Yojana (PMJDY). However it all started under the initiative of the previous government. How has been the experience?
This is about a couple of years back. Initially, we got a sample of about 20,000 villagers. It was done with IDF, an NGO authorized by the government to disburse funds. Even then, the mechanisms were in place to capture data. PMJDY has admirably formalised it making sure the bank staff is mobilised on the ground to do the account openings.
Altimetrik partnered with a large public sector bank to build a modular platform with various options to disburse and repay money. We monitored it. The Altimetrik employees were on the ground working with the people, banking correspondents, analysing the data etc.
After it was renamed as PMJDY, technology helped in streamlining a lot of the processes, right from user authentication, money disbursal and loan repayment, thus minimizing fraud and duplicity. Now, we have reached a total population of 4,45,295 across 622 villages and has brought 4500 families under its ambit by opening of 45000 Bank accounts.
What is the kind of technology stack you are looking at for the PMJDY?
The platform is modular. Because of mobile enablement, it has the mobile tablet, which has an integrated authentication on biometric and Aadhar. The other modules include card-less transactions, mobile payment and mobile wallet.
We have a separate SMS payment module, specially enabled because it is widely used. The loan disbursement and loan repayment module is integrated to the Core Banking Solution (CBS).
Broadly, how do you see the role of IT weaved into the PMJDY
Altimetrik’s role as a technology provider includes providing the IT capabilities and platform. While there are many public and private banks who are enrolling citizens for the PMJDY, Altimetrik works only with one of the largest PSU banks. It facilitates the end to end services. The Bank, Government and farmer come together to serve the end customer i.e the farmer. They are all connected using IT.
On the one hand, the government wants to facilitate the unbanked population by a technology mechanism that runs banking transactions. Thus the earlier practice of physical transfer of funds is done away with, which is the surest way to tackle anything to do with funds falling in the wrong hands.
From a bank’s angle, they are mandated to open bank accounts for the underprivileged, backed by government sponsored insurance scheme. The government will also provide funds to them under several other schemes.
On the other hand, banks themselves have loans. The past problem of banks not being able to effectively give these loans is because of having a patchy repayment history. But if the loans are tied back to a government backed scheme – then, banks are insulated, so they will give more. The government backed schemes ensures farmers have enough money not only to invest but also make their necessary payments.
Hitherto, in the absence of any of this, the villagers were borrowing at horrible lending rates – not able to repay due to crop loss, lack of income and thus getting harassed by lenders.
Now, these processes are enabled by technology adequately backed by government funds being provided to the farmers. There is a technology platform that captures the information of the villagers through an enrolment mechanism, which is authenticated, validated at the doorstep of the villager by using a tablet.
The Business Correspondent (BC) authenticates the villagers. Even the BC himself has to authenticate himself. We have an enrollment module authorized by the government.
The platform provides for defining what authentication is. In our case, we also have, community, family and group enrollment.
This is all tied back into the core banking system. The government funds disbursal can be used not only to repay the loan but also use it for the villagers’ social upliftment thus the interest burden comes down, the repayment goes up, the salary level goes up. Hence poverty is managed. This is the entire value chain we are targeting.
PMJDY: IT Links funds disbursal and repayment
PMJDY has ensured mandatory participation of the banks in this mission for financial inclusion. So, in the pre-PMJDY days, it was totally upon the banks to decide to depute their personnel to pay a visit to the villages and participate in the scheme. Without the banks having a first hand view of the movement of funds, leaves an open space for malpractices to happen. There is no mechanism to ensure whether the funds are reaching where they are intended to. The technology platform was also working in silos. The Altimetrik system took over only after the BCs have disbursed the funds to the villagers. The Altimetrik and the BC systems were connected but both were not integrated with the Bank’s CBS.
The money was disbursed to the BCs. They come to the villages, carry the cash and disburse to the villagers without any formal authentication mechanism. The record was kept and it was stored as an electronic record. The funds were used to repay the lenders at 36% interest rate. The money coming from the government was not sufficient for the farmers. Why couldn’t the banks not intervene? There was a hassle from the money lenders, because they would lose their business; Banks had no guarantee because the villagers didn’t had enough sources of income to repay.
Post the PMJDY launch, our technology platform has tied these two ends. It allows opening an account and also schedules the repayment after the loan / funds disbursal. This is well backed by the government. They provide funds. Moreover the banks are assured that their loans will be repayed because of the adequate backing by the government. So, they will lend more. So, this link from the lenders is cut off automatically reducing the rate of borrowing. Banks also have a guarantee that there is an income source for villagers without regard to the crop yield etc. The rest is economics – the more money is lended, the rate of borrowing automatically comes down.
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