Bhamashah Financial Empowerment Scheme
Project Description
INTRODUCTION
Government of Rajasthan, with following objectives to be achieved, has embarked upon Bhamashah Financial Empowerment Scheme, under which Government will deposit Rs. 1500 into the accounts of 50 lakh rural families belonging to B.P.L., small and marginal farmers and identified SC/ST families through biometrically identifiable smart cards.
Along with, it has also been decided to take up health insurance for all BPL families in rural areas, in the first stage:
a. Bring all BPL, small and marginal farmers and identified families of SC/ST in rural areas of Rajasthan to banking fold, by providing them banking access within 3-4 km. of their residence, with bank accounts opened in the name of women of these families and being operated by biometric identification.
b. As an incentive for opening the bank account in the name of the women of the family and also to financially empower the poor and marginal families, credit Rs. 1500 per family in all these accounts to enable families to spend this money on their welfare and consumption, in the manner thought best by
them with a view to empower them to take their economic and financial decisions themselves;
c. Extend benefit of health insurance, as per the Scheme of Ministry of Labour,Government of India and in accordance with the requirements of that scheme, which envisages, amongst other, coverage of Rs. 30000 per family, to all BPL families, with compensation for loss of wages, payment for stay charges and transportation expenses.
Central to the implementation of the banking segment of the programme is an electronically operated banking system infrastructure, which is expected to provide about 12000-15000 banking Points of Service (PoS), spread over the state, to provide banking service to the targeted population, in the secured manner described later, generally within three kilometres of their residence. The centralized electronic architecture, the backbone, will enable centralized monitoring and provision of all the required information and data to the state government, and also to the respective stakeholders. The same should also be acceptable to the concerned Ministries of the Government of India, Ministry of Labour for rural health scheme and the concerned regulators for banking services, RBI. The backbone provider will be primarily responsible for ensuring the same.
The programme will be expanded in times to come to bring following in its fold:
a. The benefits available under Pannadhay Amrit Scheme, which seeks to provide an insurance payment of Rs. 70000 to every rural BPL family in the event of death of the bread-winner and also scholarship of Rs. 100 per month to the children of these families studying in classes 10th to 12th, will also berouted through this infrastructure.
b. Routing of payments under state government programme directly in the accounts of the respective beneficiary family e.g. pension payments under old age, physically handicapped and widows scheme and under NREGS;
c. Routing of scholarship amount and death claims under Pannadhay Scheme into their accounts directly.
d. Transfer of voucher amounts like transport voucher, education vouchers, Annapurna scheme etc. to the smart cards of the beneficiaries;
e. Monetising benefits of identified programmes and delivering them through these smart cards e.g. converting embedded subsidy in the public distribution scheme and delivering the same in cash through smart card with the choice of buying required grain or kerosene from wherever the family likes to the
family.
f. Other schemes of GoI/GoR, that may be announced from time to time and may involve transfer of funds/moneys directly to specific beneficiaries.
It is difficult to state estimated amounts of transfers to be made under the arrangement or to set any specific timelines to the same. Till the time the Government decides to transfer payments under major schemes like National Rural Employment Guarantee Scheme and Old Age Pension Scheme, the Points of Services for banking operations will be expected to be operated at least one designated day every week, except where existing bank branches, outlets or post offices are to act as Points of Service, in that case they can provide full normal service. There would also be a limit of drawal of Rs.
500 per transaction until such time also. The day will be fixed for each PoS and would be given adequate publicity and also information would be pasted at the Point of Service.
BUDGET ANNOUNCEMENT
Chief Minister in her budget speech for 2008-09 made the announcement of the Bhamashah scheme, with the following commitments:
1. Government of Rajasthan will implement the Government of India, Ministry of Labour’s, Rural Health Insurance Scheme, in eight districts of Rajasthan-
2. Government of Rajasthan will also go ahead and prepone implementation of the Health Insurance Scheme in the remaining twenty five districts of Rajasthan, at its cost, till the programme gets taken over by the Government of India, in the remaining districts;
3. Government of Rajasthan will incentivise these 25 lakh BPL families to open a bank account in the name of the women of the family, which should be smart card operated with bio-metric identification. To incentivise this, Government of Rajasthan will pay Rs. 1500 to each such family.
4. In addition, another 25 lakh families belonging to small and marginal farmers (other than those which are BPL) and SC and ST (identified according to a criterion to be laid down) will also be encouraged to open such bank accounts using smart cards and bio-metrics by providing them also an amount of Rs.1500 per family, provided the account is opened in the name of the women of the family. These families will have the option of obtaining health insurance at their cost.
PHYSICAL INFRASTRUCTURE REQUIRED TO IMPLEMENT THE SCHEME
This scheme will require a state wide electronic infrastructure and points of service. The estimated infrastructure requirement is as under:
a. The Scheme envisage a smart card which should be capable of carrying the banking product and health insurance product initially and should be capable of building in other benefit products as these are extended from time to time.
Smart card thus envisaged is a multi-benefit programme carrying smart card.
This might require the card to have larger capacity like 64 kb. The card should be usable for banking service at any point of service in the same Panchayat Samiti, at least, and for other benefits at all places where he is entitled to access the facility available to him under the Scheme.
b. To deliver the banking services of depositing and withdrawing from the bank account normally within 3-5 kilometres of the residence of covered families, it is estimated that about 15000 points of service may need to be created.
c. To deliver the health insurance service, it is estimated that about 1500-2000 points of services may be required to be created. In order to meet these requirements, it is expected that the infrastructure service provider will need to create the following:
a. A state data centre.
b. Enrolment infrastructure to capture details and bio-metrics for 50 lakh
identified families by September 2008;
c. Issue multiple benefit smart cards to the enrolled population;
d. Points of service, capable of effecting banking transactions of depositing and withdrawal and also provide necessary receipts and accounts copy and all other identified benefit transactions at the respective PoS.
e. Connectivity of points of service with the state data centre and with the banks and insurance service provider.
f. Connectivity with the concerned central government Ministry, the state government departments concerned with implementation of scheme and agency banks, making payment from the government account.
Physical infrastructure including a, b, c, e, and f above, may be called ‘backbone’ for the ease of description and infrastructure at d may be called PoS infrastructure.
Whenever more and more services are added, either connectivity envisaged at e and f will have to be enhanced, which would amount of expanding backbone or new PoSs
may need to be created, depending upon whether the same can be delivered through existing PoS or new PoSs will be required to be created. The infrastructure should be capable of ensuring that there are no duplicates. Hence, the system should be capable of state wide biometric de-duplication.
OPERATING INFRASTRUCTURE AT POINTS OF SERVICE
All points of service (PoS) will be required to be managed. The PoS operator will deliver the services to the targeted families. For example, operator engaged by the Bank will provide banking services of depositing moneys and withdrawing moneys. Operator authorized by the Insurance Provider will be required to upload the data of treatment etc. to get the required authorisation from the Insurance Provider to extend treatment in the cashless payment mode.
OPTIONS FOR PHSYCIAL AND OPERATING INFRASTURE AT POINTS OF SERVICE
There are three possible ways in which the physical infrastructure at PoS and PoS operator arrangements can be made:
a. Infrastructure provider can also provide operating service, as an agent of the Bank or Insurance Provider, or under some other acceptable arrangement between them. For example, Infrastructure Provider may provide not only the physical electronic infrastructure of computers, card readers etc. and issue smart cards and also acts as banking correspondent of bank or banks allowed under the scheme.
b. The Bank or Hospital may provide physical infrastructure and operating service at the PoS with PoS, logging on to the backbone provided by the Infrastructure Provider. In this arrangement Infrastructure Provider provides only the backbone, with the rest taken care of by the PoS operator, including physical electronic infrastructure at PoSs.
c. The Infrastructure Provider may provide backbone and physical electronic infrastructure at PoS with operating service being provided by the Bank or the Hospital as the case may be. For example, in this case, physical electronic infrastructure at PoS can be provided by the Bank and operating service by
the business correspondent, other than the Infrastructure Provider, chosen by the Bank.
IDENTIFICATION OF BANKS FOR BANKING SERVICE AND ROUTING OF 1500 RUPEES
Minimum banking service expected to be provided to the families covered under the scheme is the facility of deposits and withdrawal, along with generation of necessary receipts and providing copy of the bank account. Banks can provide these services by setting up Points of Services by entering into business correspondent arrangement with eligible parties under the Financial Inclusion Scheme of the Reserve Bank of India. Post Offices can also provide this service, under the Post Office Savings Bank Act.
Government of Rajasthan intends to identify banks/ post office on district to district basis. Government is initiating a process, simultaneously to identify/ select banks/post offices, from amongst the banks, which offer their services for all 237 blocks of the state. There would no constraint of service area approach for this scheme. The Banks/ post office, offering to provide banking service in any block would need to provide entire physical electronic infrastructure and operating service at the Points of Services, required to provide banking services within three-four kilometres of the residences of identified families. Banks/ Post office can choose to establish physical infrastructure on their own and plug in to the backbone to be provided by the Infrastructure Provider or physical infrastructure at PoS point can be provided by the Infrastructure Provider, with or without banking correspondent service also. If more than one bank expresses interest for any district, Government will make appropriate selection on technical and cost considerations.
The selection of banks for each district/ block will be made by the government after the infrastructure service provider is selected. Infrastructure service provider will also be free to identify banks as either part of bidding consortium or under any of three options outlined above.
If any bank indicates its interest to set up PoS on its own on a district wide basis, government may consider entering into agreement with such a bank for the district also provided such a bank enters into agreement with the backbone provider to provide necessary data and information to the government.
OPTIONS FOR PAYMENT FOR BACKBONE, POINTS OF SERVICE AND OPERATING SERVICE
Backbone:
Government expects one single Infrastructure Provider on its own or in any consortium to set up the backbone. Infrastructure investment, with expected up-gradations over the period of its life, can be either paid up-front by the Government or these can be recovered by an annual fixed payment or its cost can be recovered as part of the transactions through the system. Operating cost of the backbone is expected to be quite low and almost same over the years. This cost can be considered as part of the fixed cost.
Enrolment and Points of Service:
Enrolment, card issuance, and establishment of Points of Service have two kinds of cost implications. It will require investment to be made in setting up computers/ laptop at the point of enrolment and service or at least install card reader and also provide operating service at these points of service, which will include cash collections and provision to the PoS, depending upon varying requirements during the course of year. The cost of enrolment and card issuance can be paid as one time payment.
Cost of PoS, along with operating service, is best recovered as transaction charge, with a certain guaranteed minimum, for the minimum expected number of transactions in a year. The transaction based charges, can be shared between Infrastructure Provider and the Operating Service provider, depending upon the investment made and operating service provided by the two respectively.
MODEL FOR INFRASTURE SERVICE PROVIDER UNDER THE SCHEME
Government of Rajasthan envisages following arrangement for implementation of the Scheme
a. Government will engage an Infrastructure Provider for the ‘backbone’ i.e. the Infrastructure Provider will provide following:
i. set up state data centre,
ii. Enrolment infrastructure to capture details and bio-metrics for 50 lakh identified families by September 2008;
iii. Issue smart cards, capable of servicing two products of banking services and health insurance scheme, to be operated with biometric identification. Smart cards should also have enough space for allowing other products also to ride on it, as and when decided.
iv. Connectivity with the concerned central government Ministry, the state government departments concerned with implementation of scheme and agency banks, making payment from the government
account.
v. provide connectivity and information flows from and to the PoSs.
The state data centre can be built afresh, or existing state data centre withDepartment of Information Technology, Government of Rajasthan can be utilised, at the option of the Infrastructure Provider. In case, Infrastructure Provider wishes to use his own data centre, the same would be subject to assessment of data security and in such a case a mirror data centre will need to be created with the Government of Rajasthan. Bids would be assessed without any different treatment in terms of cost.
b. Infrastructure Provider will enter into agreement with post offices and banks, identified by the state government on district/block basis (in case any bank agrees to provide banking service with infrastructure service provider as part of consortium or on firm commitment basis as part of bid, this may not be necessary in such areas), to offer to set up Points of Service and also providing banking service. Infrastructure Provider will offer to set up physical infrastructure at Points of Service at a cost to be indicated upfront. If Banks or Post Office wants to make physical infrastructure at PoS either on cost or for any other strategic consideration, the plugging in service to the backbone will be provided by the Infrastructure Provider without any additional cost.
c. Primary responsibility for providing operating service at the PoS for banking service would be that of the Bank or the Post Office, as the case may be. Banks/ Post Offices can do it on their own, through their own staff, or by engaging a banking correspondent under the RBI’s scheme of Financial Inclusion or by entrusting the operating service to the Infrastructure Provider, as their agent for this purpose.
d. Physical Infrastructure for Points of Service for the Health Insurance Scheme will be established by the Infrastructure Service Provider for government hospitals recognized under the Scheme, whereas the operating service at these Points of Service will be provided by the government staff. Points of Service, at private hospitals recognized under the Scheme, will be set up by the private hospitals, although they may ask the Infrastructure Provider to do it for them. No payment for either setting up Points of Service or for operating service at private hospitals will be made by the Government. For physical electronic infrastructure set up at government hospitals, government will pay to the infrastructure provider in the form of fixed annual charge.
e. Similar arrangements, like either the banking service product or health insurance product, will be made as and when any other service is placed under this platform.
DIALOGUE WITH THE BANKS
Bhamashah Scheme as envisaged by the Government and infrastructure arrangement laid our above was explained to the Banks in the meeting of State Level Bankers Committee. The Scheme was also circulated to the Banks through State Lead Bank to elicit their interest under the above arrangement to the state for providing banking service under the scheme in the following manner:
a. Any Bank may indicate its interest to take up one or more district or part of a district (not less than a complete panchayat Samiti) under the arrangement that such bank, with its own, with its’ technology partner for setting up PoS and business correspondent for providing operating service, will provide the
banking service and data/ information required by government through the backbone envisaged under the arrangement or directly to the state data centre with connectivity established by the bank. (Option I)
b. Any bank may indicate its interest to take up one or more district or part of a district (not less than a complete panchayat Samiti) any of the three options with the infrastructure service provider as detailed above under the heading OPTIONS FOR PHSYCIAL AND OPERATING INFRASTURE AT POINTS OF SERVICE.