Ref.No.NB.HO.DFIBT/ 7824-7906/ DFIBT-23/ 2018-19
Circular No. 172/ DFIBT–28/ 2018
06 July 2018
The Chairman / Chief Executive Officer
Scheduled Commercial Banks
Regional Rural Banks
Dual Authentication at BC points for SHG transactions Grant Support to SCBs and RRBs under Financial Inclusion Fund (FIF)
Business correspondents (BCs) provide financial and banking services such as deposits, remittance and insurance to people living in far-flung rural and unbanked areas, and are a critical part of the government’s financial inclusion initiative. At present the Business Correspondents (BC) are providing the above services to sole account holders with single authentication. Even though SHGs have become a noteworthy link between 1/3 of the poor families and the formal banking system, the SHG accounts are operated jointly by two authorized members and these SHGs are conducting their banking transactions only at the bank branches even though BC are providing similar services close to their door steps.
NABARD has conducted successfully a Pilot project viz., “Bank Sakhi” in two RRBs in Uttar Pradesh and Madhya Pradesh on ‘Dual Authentication’ feature which makes it feasible for SHGs to transact at the BC point. Dual authentication involves development of a software patch both at CBS of the banks and microATMs at the BCs. It has been decided to provide financial support for making such changes in the banking software.
Thus, to provide an enabling eco-system for the SHGs to seamlessly operate at BC points with the proposed ‘Dual Authentication’ feature, the scheme under FIF to support Scheduled Commercial Banks (SCBs) and Regional Rural Banks (RRBs) for enabling Dual Authentication option in the microATMs for SHG transactions is being launched.
The details of the scheme are provided below:
1. Scheme Name: The scheme will be known as “Dual Authentication at BC points for SHG transactions – Grant Support to SCBs and RRBs”.
2. Objective: To provide one time grant assistance towards development of software patch and its installation on microATM for a maximum of three Technical Service Providers (TSPs) of SCBs and a maximum of two TSPs of RRBs.
3. Components of the ‘Dual Authentication’ Application
The software application integrating SHG Account opening and operations may include the following components:
i. SHG Account opening Process: briefly involves validating details of individual members, validation against CBS database, recording of authorised signatories and creation of Account.
ii. SHG Migration Process: validates finger prints and photographs of existing SHG members through SHG Migration module.
iii. Change in Customer Creation Process: enables addition of fields related to additional details like occupation / education etc.
iv. SHG Transaction Process: module for enabling financial transactions.
4. Institutions eligible for support:
SCBs and RRBs which have employed BCs and have ‘Dual Authentication’ feature enabled in the microATMs provided by their TSPs.
5. Extent of Support:
i. The extent of support to the SCBs and the RRBs will be as under:
Sr. No. Bank Extent of Support
a) SCBs 60% of total expenditure or Rs. 7.00 lakh (whichever is lower) per TSP for maximum of 3 TSPs per Bank
b) RRBs 80% of total expenditure or Rs. 7.00 lakh (whichever is lower) per TSP for maximum of 2 TSPs per Bank
100% of the total expenditure or Rs. 7.00 lakh (whichever is lower) per bank per TSP, for eligible institutions in North Eastern Region, Sikkim, Jammu & Kashmir, Uttarakhand, Himachal Pradesh, Chhattisgarh, Jharkhand and Andaman & Nicobar Islands.
ii. Support is limited to the development of software patch and its installation on micro ATM. Other OPEX, if any, will be borne by the Bank.
6. Sanction and Claim:
i. The scheme is open for eligible banks which have employed BCs and have ‘Dual Authentication’ feature enabled in the microATMs provided by their TSPs on or after 01 April 2017. The proposals for sanction (as per format in Annexure-I) may be submitted to NABARD Regional Office (RO) for a single State and to Head Office (HO) for multiple States, up to 31 March 2019.
ii. The claims (as per format in Annexure-II) may be submitted by the Bank to NABARD RO/ HO on or before 30 June 2019 in single installment.
7. Other Conditions:
i. The Bank shall claim grant support after all the microATMs provided by TSPs taking support under the scheme are ‘Dual Authentication’ enabled as indicated at point 3 above and all the SHGs formed/ linked by the Bank in such areas are able to transact at these micro ATMs. The claims will be made on reimbursement basis (after the payment has been made to the vendor).
ii. The assistance may be utilized towards cost incurred for development of software patch and its installation on microATMs.
iii. The ‘Dual Authentication’ facility should conform to the guidelines mandated by NPCI, UIDAI or any other such agency.
iv. The scheme will function on the principle of ‘First come First serve’, until the allocated budget is exhausted or last date of sanction is reached, whichever is earlier.
v. The financial support, if any, received from any other agency/agencies for ‘Dual Authentication on microATMs’ may be excluded from the claim.
vi. The Bank will accept the terms and conditions of sanctions to be enumerated in the sanction letter.
vii. The Bank will execute a Memorandum of Agreement with NABARD as per Circular No. 52/ DFIBT-05/ 2018 dated 20 March 2018, if not executed earlier.
viii. The treatment of GST would be governed by Circular No. 87/ DFIBT-11/ 2018 dated 25 April 2018.
ix. The Bank will maintain locational details of the BC points supported under the scheme and facilitate any monitoring /evaluation of the project to be taken up by NABARD through its own offices or some other agency.
x. The Bank is required to preserve the original invoice, receipts, agreements etc. related to the procurement for any future requirement by NABARD.
xi. The Bank will follow due diligence for procurement/awarding contracts and comply with statutory and regulatory guidelines on outsourcing.
Chief General Manager