Digital Bangladesh – Taking the G2P (Government to People) Public Services at the Doorsteps of Poor and Vulnerable

The newly piloted ‘MIS Integrated G2P Payment System’ benefit from four sides and is a Win-Win Situation for all stakeholders. It allows poor and vulnerable Beneficiaries to withdraw money at their own choice in terms of mode (Bank, Mobile Money,  Post Office etc.), location (Village, Union), quantum and time that is convenient to them at a zero cash-out charges. It also benefits the Exchequer as the money is withdrawn from the Treasury only when it is due to be paid and not left idle for even one day. For the Line Ministries that are engaged in implementing safety net programs, it strengthens information system and prevents leakages as it require National Id (NID) verification at registration and NID validation before payment cycle is executed to prevent leakages in terms of double dipping and duplicate beneficiaries. It also foster financial inclusion in the country in a big way since millions of poor and vulnerable beneficiaries shall be brought under the purview of low cost and conveniently located financial services.

Hon. Finance Minster Bangladesh Rolling Out G2P for Maternity Allowance Program
Also seen is the State Minister for Women and Children Affairs, Bangladesh

Story of Munni Bai: Munni Bai (name changed), aged 26, a pregnant woman in a remote village at Tungipara Upazila (sub district) in Bangladesh had to cross two rivers and travel almost 20 kms to reach to the nearest branch of Sonali Bank located at the sub district headquarter to collect her BDT 3000 (USD 36.oo) on a six monthly basis, provided by the Government of Bangladesh. Due to her precarious physical condition she had to be accompanied by her husband or brother who too had to forgo that day’s wages and incur further cost on travel. Effectively, the cost to collect BDT 3000.oo turned out to them exorbitantly high at nearly BDT 750.oo ie 25%. The inconvenience was higher, when the dates to collect the money were specified and limited and had a very short window of three days. She had little choice to collect it. And imagine, if she was sick during these three days, the other window to collect the money was an enigma for her and the family.

Munni Bai like many other half a million poor women, is the recipient of the ‘Maternity Allowance for Poor Women’, a social safety net program of the Ministry of Women and Children Affairs (MoWCA) of the Government of Bangladesh that offers a monthly allowance BDT 500.oo (USD 6.oo) to the poor women with the objective of providing financial assistance to poor pregnant women in rural Bangladesh in order to improve health and nutritional condition of both the mother and the baby. Ideally, she should be receiving BDT 500.oo on a monthly basis in order to provide herself and her baby a healthy nutrition. However, she receives the same at a lag of 6 - 8 months and that too when she receives the amount, it is paid as lumpsum (BDT 3000.oo) after 6 months. The lumpsum money usually got invested into buying an asset or helping her husband in expanding his business, or for buying agricultural inputs, thus completely defeating the purpose (Health & Nutrition) for which it was delivered.

When spoken to her, Munni Bai showed her keen desire to opt for a more convenient location, frequency and mode of payment that was available in her own village within a stone’s throw distance rather than at the Upazila Hq. The Post Office or the mobile financial service (MFS) providers such as bKash and / or Rocket were always there in the vicinity. However, she knew that things couldn’t turnout the way she wanted them to be and hence it remained a dream for her to withdraw her own money at her own convenient time on a regular monthly basis without traveling and being accompanied by someone else.

Government Side: Interestingly, the Ministry of Finance which provides the Budget to the MoWCA line ministry for delivering these cash benefits also grappled with the multiple challenges such as inefficiency in its cash management for safety net programs. The concerned line ministry such as MoWCA used to withdraw money from the exchequer (Finance) and deposit the same in a non-interest bearing account of the scheme with various banks. In many cases, the money was unnecessarily withdrawn and remained unutilized for more than 6 months. Hence while the Finance was deprived of the funds for that period, even the beneficiaries couldn’t get the same since the processes involved were inefficient. Moreover, even the MoWCA was not sure if the beneficiaries that they are paying to were also being benefitted by some other scheme of their own department or even the other ministry. For, the data of one program never used to talk to the data of the other and the beneficiaries were never recognized by a single and unique identity number.

The New MIS Integrated G2P Payment System: The new G2P Payment System, designed, developed and piloted last week by our project ‘Strengthening Public Financial Management for Social Protection’ (SPFMSP), funded by the UK’s DFID and Australia’s DFAT and managed by Maxwell Stamp Plc. UK, was rolled out by the Government for MA scheme in 7 Upazilas. The system that harnesses many of the existing pieces and institutions is committed to serve the people at the lowest economic strata and offer them benefits of the social safety net programs to reach at their doorsteps. Beneficiaries of the MA Program, who are largely vulnerable women are now empowered to take informed decision about their choice of mode of payment viz.  Bank, Mobile Money or Post Office whichever is convenient to them and are now entitle to receive the money on a monthly basis rather than after a gap of 6 – 8 months.

Comparative Systems

Stakeholders	Old Prevailing System	New MIS Integrated G2P Payment System
Beneficiaries	No Choice to Collect Money in terms of Time Locations and Cost (TLC). Had to travel long distances on a specified date and withdraw full amount. Spend Time and Money on Travel and Wage Lost. Money received after a lag of 6 – 8 months	Choice to Collect Money from any convenient location, time and quantum. Money delivered at doorsteps in own village. No cash out charges and costs involved. Money to be received on Monthly basis with No Lag.
Exchequer (Finance Ministry)	Money withdrawn by Departments well ahead of time and kept in Bank accounts of Scheme at all districts and Upazila bank accounts. No planning for cash flows. Treasury Non-Compliant	Money withdrawn from Treasury only when it is due to be paid to the Beneficiaries. No intermittent bank accounts and no unutilized money laying idle. Treasury Compliant with planned cash flow management preventing external borrowings
Line Ministries of Social Protection	Weak or no Information Systems. Processes liable to Inclusion Errors and Leakages with no data verifications and no scope of data validations with other schemes leading to possibility of ghost beneficiaries, duplicates etc.	One Time NID Verification of Beneficiaries at Registration and NID Validation with different programs before payment is effected. System to identify ineligibility,   double dipping, ghost and duplicate beneficiaries and prevent leakages.
Financial System and Inclusion	Limited Localized Ledger oriented bank accounts with zero transactions and services. Only for withdrawal of safety net benefits	Full Financial Inclusion in terms of holding Individual Accounts in Core Banking in Banks and / or Mobile Financial Services with scope for all other financial services open. Financial and mobile operational literacy imparted

The new system is also compliant with the Treasury Rules and permit withdrawal of money from the Exchequer ‘Just in Time’ and only when the money is required to be transferred to the beneficiaries. This also allows the Finance Ministry to control and accurately forecast their cash out flows in terms of USD 6.5 Billion (2017 – 18 budget for social safety net programs) and prevent any unnecessary advance withdrawals from the Treasury and floats being enjoyed by the banks for months together. The MIS processes also verifies each beneficiary using their NIDs with the Election Commission NID Server as so to prevent registration of any ghost beneficiaries. The system also provides a repository of each beneficiaries' NID that form part of one or the other safety net program in Bangladesh. This allows the system to cross validate the NID database for each of the beneficiary and identifies if they are already taking benefits under any other scheme and thus prevents leakages in terms of double dipping and duplicates. For age specified schemes such as Maternity Allowance (19 - 35 years), Old Age Allowance (62 years) it also prevents registration of under-aged or over-aged beneficiaries 

Convenience at Doorsteps: Women like Munni Bai, who had to travel miles together with a companion to the Bank branch at the Upazila Headquarter on a specified date to collect their allowances and shell out heavy cost in terms of travel and opportunity will be benefited tremendously. Collecting money at their convenient time and location within the village, through a choice of mode (Mobile etc) and amount is like a dream come true for them. Prompt and Just in Time Delivery of Public Services in a Simplified and Transparent manner at lowest possible cost to the Beneficiary has now been developed and successfully piloted.

Camps Organized at Villages to Open Accounts for Mobile Financial Services and Impart Mobile Financial Literacy 

Way Forward: The Government of Bangladesh has to now reckon the biggest challenge of accurately digitizing the database of beneficiaries of all including capturing their NIDs and Payment Choices for receiving benefits. Other social safety net programmes such as Old Age Allowances, Widows and Disability Allowances programs are already in the process of digitization. For all programs just as in case of the piloted MA program, there is also a need to expand the digitization to all safety net programs throughout the length and breadth of Bangladesh. However, With a Well Begun, its already Half Done.

Global Conflicts and the Poor: Where Are We Heading For?

Backdrop: Our generation is witnessing a Unique Phenomenon amid Expanding Global Conflicts when a Record number, Sixty Million People are found to be Displaced as Refugees. The phenomenon of a Global surge in War, Conflict, Persecution, Religious Fundamentalism, Terrorism, Political Unrest, Border Disputes, Armed Rebellion, Internal Disturbances and External Aggressions, Sectarian Hostilities etc. on one hand and Natural Disasters, Forced Displacement due to Developmental Actions etc on the other, are all responsible for such unprecedented and dramatic shift.

Issues: This number has almost doubled in the past ten years, while in the past five years at least 15 conflicts have erupted or reignited. The figures, collected by the UN agency for its latest Global Trends: World at War, suggest that one in every 122 humans is now either a refugee, internally displaced, or seeking asylum. The number if notionally considered for the population of a country, it would be the world’s 24^th largest.

Just to Name a Few Africa: Côte d'Ivoire, The Central African Republic, Libya, Mali, South Sudan, Northeastern Nigeria, The Democratic Republic of the Congo and Burundi. Middle East:  Syria, Iraq and Yemen Europe: Ukraine Asia: Kyrgyzstan, Myanmar and Pakistan

More recently, I was in Kigali, Rwanda last month (May 2015) when just 200 kms south of us, we had the crises precipitated in Burundi. Over past two months, nearly 100,000 Burundians have fled across the borders, seeking safety in neighbouring Rwanda, Tanzania and the Democratic Republic of the Congo.

The plethora of crises and conflicts, observes the UN study, has also provoked a dangerous and worsening trend in irregular migration as millions of refugees around the world are pushed into an uncomfortable and deadly dynamic with human traffickers and smugglers as they seek passage to safety. Against that backdrop, the alarming figures detailing the global refugee situation is ultimately compounded by the fact that over half of the world's total refugees are children.

Alternatives: While the short term solution may simply lie in a greater humanitarian aid, it would only act a patch work and seldom provide a permanent solution.  Had the permanent solutions or alternatives as simple, the world would have seen a different Twenty First Century and our generation would have witnessed much better lives and peace. The recent implementation of the accord between India and Bangladesh on the Land Border Dispute through an amicable solution, acceptable to one and all is a typical example of a long term solution that I witnessed in Dhaka early this month. Can we think of more such accords globally? Can India and Bangladesh bilaterally teach the World what the multilateral agencies have not learnt from the past Global experiences?

It would be specious to opine that the prima facie evidence suggest short term patch work may not work. It certainly will. However, the long term and permanent solution may require strong political will both, in heart as well as soul from all stakeholders, building global efforts that are robust and solid and yet, dynamic. Sustainability efforts targeting livelihoods opportunity, generating and serving commercial and economic interest would certainly help. However, bringing this change by means of social protection in a different milieu altogether would require a paradigm shift in the thinking of the welfare states and the agencies such as UNHCR and the multilaterals like the UNDP, World Bank, ADB, DFID etc.

An approach that is the basic of all fundamental tactics and strategies will have to be adopted by one and all. An approach to provide basic and fundamental education, linking education with income generating activities and livelihoods, ability and talent based skill development, providing basic training on managing money and micro wealth management practices could be just one part of the sustainable development. As part of the social protection and providing social safety nets in the interim like employment generation for building infrastructure, social insurance such as micro insurance including life, accidental and health insurance to cover the risk of death and co contributory micro pensions to fight against old age poverty and cover the risk of longevity should be considered as part of the rehabilitation package itself.  

Policy Issue: More than one fifth of the world’s population lives on less than US$1.25 per day. Many of these families depend on insecure and fragile livelihoods, including casual farm and domestic labor. Their income is frequently irregular or seasonal, putting laborers and their families at risk of hunger. Self-employment is often the only viable alternative to menial labor for the ultra-poor, yet many lack the necessary cash or skills to start a business that could earn more than casual labor.

In the past, many programs that have provided ultra-poor households with either credit or training to alleviate these constraints have not been successful at raising household income levels on average.  However, in recent years, several international and local nongovernmental organizations have renewed their support for programs that foster a transition to more secure livelihoods. Combining complementary approaches—the transfer of a productive asset, training, consumption support, and coaching— into one comprehensive program may help spur a sustainable transition to self-employment.

The Graduation Approach: This is a basic approach targeted to the ultra poor where an impact may be visible for an 18-month comprehensive livelihoods program (“the Graduation approach”). This approach was first developed by Bangladeshi NGO BRAC in 2002 and has since been replicated in several countries. One of the recent pilot of the IPA (Innovations for Poverty Action) was tested in Indian context with Bandhan, an MFI.

The Graduation Approach Experiment in India The intervention consisted of six complementary components, each designed to address specific constraints facing ultra-poor households: 1. Productive asset transfer: One-time transfer of a productive asset, 2. Technical skills training on running a business and managing livelihood. 3. Consumption support: weekly cash transfers for 13 to 40 weeks 4. Savings: Compulsory Savings for Households 5. Home visits: Weekly home visits by Bandhan staff to provide accountability, coaching, and encouragement and 6. Health: During weekly home visits, Bandhan staff discussed health matters. Impact analysis highlights that long-run benefits outweighed their up-front costs. Economic impacts: Average total monthly consumption had an 11 percent increase over households in the comparison group with more households reporting to having enough food every day. Ownership of household and productive assets also increased significantly among Graduation program participants and so was the measures of financial inclusion. Self-employment: Households reported spending 25 minutes more per day on productive activities and experienced a nearly four-fold increase in livestock revenue relative to comparison group households. Psychosocial wellbeing: The Graduation program did not affect measures of physical or mental health. There were no changes in illness, happiness, stress, or likelihood of feeling anxious or worried in the last year. Political Involvement: One year after the program ended, 55 percent of treatment group households reported voting in the last election (compared to 48 percent of the comparison group) and 49 percent reported voicing concerns with their village leaders in the past year (compared to 44 percent in the comparison group). Cost-benefit analysis: Compared to less comprehensive interventions, the Graduation program had relatively high up-front costs. While the total implementation and program costs was US$330 per household (2014 PPP US$ 1,455) the estimated benefits from consumption and asset growth amount to 2014 PPP US$6,298 per household, representing an overall 433 percent return.

The IPA experiment was also piloted in half a dozen more countries and can be replicated and scaled in such conflict affected areas where a greater intervention is necessary on humanitarian grounds. Thus while a higher humanitarian aid in an immediate term could be the demand of the time that serves the immediate needs, a more semi-permanent need based approach may be required to provide for social insurance and social safety nets in the medium term so as to build up a more everlasting and perpetual solution to create sustainable livelihoods in the longer term.

Welcome to the Country of a ‘Thousand Hills and a Million Smiles’! – An Ideal Paradise for Pension and Financial Inclusion

Just Imagine: Imagine a country which has an impeccable system of identifying each and every individual by a uniquely designed and assigned number having two check digits, the National Identification Number. And, imagine if each of the individual’s National id is also linked to their individual bank account; overdraft and credit account through a well-designed and articulated real time credit bureau; Passport; Voter card, Social Security and Insurance that they buy; individual driving license; the registration number of the automobile that they possess; the SIM card of their Mobile phones and the likes. Also imagine, if each of these individual ids also possess their finger prints and thumb impression. And all of this resting and hosted at a Safe and Secured Central Location providing access to agencies such as banking, credit bureau, road authority and above all the Police (Internal Security). Imagine, Crime detection in almost real time since finger prints of all individuals are available with the Police that are linked to their mobile numbers and addresses.

Think About It: For civic amenities, the capital city possess no threat of traffic jams, people follow and obey traffic rules including sticking to their lanes and stopping at red lights. A wonderful combination of public transport of busses and two wheelers. This country has a uniquely designed water bodies including storm water disposition where one would not find any open drains, zero open water tanks, no foul smell of any drainage, a zero plastic / polythene country with well-located public toilets to respond to the nature’s call and no one spitting tobacco or beetle / pan on the roads, nor spoiling the beauty of the streets by any trash being piled up on the roads. No street dogs, no strayed animals, and no misbehaviour on the roads, women moving freely even at odd hours in the night and many stores open on a 24 hours basis. People are generally happy and fun loving with would be found stuck to their radios and songs and many even singing while walking on roads.

Governance: For governance, a huge commitment is seen amongst the politicians and civil servants alike. Again Imagine, where the Minister (portfolio hidden for identity sake) himself goes to the gym at 6.00 AM and still reaches his office at sharp 7.00 and where all the civil servants including senior and juniors reach the offices at 7.00 AM, the time when the government offices (7.00 AM to 5.00 PM) open and the bureaucrats start working diligently. Even the public start reaching the public offices for their work from 7.00 AM itself. Where the civil servants are smartly dressed in a tie and suit almost giving an impression of a dignified uniform. Where the senior civil servants drive their own vehicles without being driven as in a colonial environment and that their timing and commitment is of the highest order. A country where even the Wiki admits that the corruption is very low and hence governance high. A ticket is issued for exceeding the speed limit even at lesser known district headquarter with no cash dealings or nepotism.

Financial Inclusion: As an access to finance and credit this country has taken huge strides and provides gateway to finance to 76% of the population and only perhaps 1% population is deprived of any credit while 23% population does not require any credit.  By the way, the country is extremely Young with 78% below aged 35 and more than 50% population below the age of 19 and just a 3% population which has crossed their 60^th year of age.

Think about it, Again.

Is it not a Dream Country or a country known to us. Is it where you would like to live or migrate to? Is it a paradise for retiring into elderly lives? For nature lovers this country has lakes, mountains and jungles with rich flora and fauna. One of the lakes has a depth of 490 meters (Top 20 Deepest in world) and the Tourism attracts you with a ‘Country of Thousand Mountains and Million Smiles’ at an altitude ranging from 950 meters above sea level to 4800 meters above MSL. While one sizzles at 40 + Degrees in May in Delhi, this city provides respite at 18 Degrees in the month of May. It could be the developed world of the West like the German Capital or any European city, or even as clean as that of the Oriental Singapore or Hong Kong.

Well. U got me Wrong. This is neither in Europe, USA or Aussie. Not even Singapore of HK. This is Rwanda and the capital city of Kigali that I am talking about.

Scratch your grey matter. Kigali Airport??? Recall? Yes, the same airport where my childhood hero, the Phantom, the ghost who walks used to take his flights to the USA to meet his beloved Diana Palmer somewhere in California. But Rwanda is no more a home to Lee Falk’s Phantom or to the Wembessy tribe or Goran who used to guard his territory of the Skull Cave in the forest. It’s a reality. A reality that many nations would envy upon.

Coming back to this beautiful country and its magnificent people Rwanda has a knack for ‘Governance and Home-Grown Solutions’ and puts in place democratic, decentralized administrative structures, which are able to mobilize the population in order to implement Government programs and resolve problems.

Access to Finance: On the Financial Inclusion front, Access to Finance, Rwanda (AFR), aims at building institutional capacity of financial institutions to deliver products and services suited for the needs of the population and their enterprises. Other interventions include supporting financial education and improving policy coordination and dialogue within the financial sector and between the financial sector and the productive sectors. AFR supports several initiatives that lead to the strengthening of the banking and microfinance sector in Rwanda. It not only supports the Credit eference Bureau (CRB) and promotes MSME finance in Rwanda, but also promotes Financial Education in Rwanda. Rwanda has made solid progress towards the greater availability and usage of electronic payments which is shown by the increasing number of services, providers and financial touch points in the country. They could all be used as the ideal channels to promote an Informal sector contributory pension scheme, besides financial inclusion.

The institutionalization of some of it home grown solutions and traditions owes to at least two of its permanent foundations. Umuganda and SACCOs

Umuganda: In traditional Rwandan culture, members of the community would call upon their family, friends and neighbors to help them complete a difficult task. As part of efforts to reconstruct Rwanda and nurture a shared national identity, the Government of Rwanda drew on aspects of Rwandan culture and traditional practices to enrich and adapt its development programs to the country’s needs and context. The result is a set of Home Grown Solutions — culturally owned practices translated into sustainable development programs. One of these Home Grown Solutions is ‘Umuganda’, meaning thereby, ‘coming together in common purpose to achieve an outcome’. In Rwanda, there is a mandatory community service day from 8:00am to 11:00am, on the last Saturday of each month and this day is called umunsi w’umuganda, meaning “contribution made by the community” which is designed to be a day of contribution and building the country by citizens themselves. By law all able bodied persons above the age of 18 and below 65 are expected to participate in volunteer community work. The start of this practice goes back to colonial times and is still practiced today. Participation in Umuganda is usually supervised by a manager, or Umudugudu chairperson who oversees the effectiveness and efficiency of community participation. On this day, business activity halts, public transportation is limited, and people are seen everywhere working. People participate in cleaning streets, cutting grass and trimming bushes along roads, or repairing public facilities or building houses for vulnerable persons. People with particular skills offer their services for free on this day. For example, doctors may offer free medical examination. The benefits of Umuganda are not merely economic. The day is intended to build community involvement and strengthen cohesion between persons of different background and levels. One such a benefit is that people can access authorities to articulate their needs and voice opinions on various issues. Today close to 80% of Rwandans take part in monthly community work. Successful projects include the building of schools, medical centres and hydro electric plants as well as rehabilitating wetlands and creating highly productive agricultural plots. The value of Umuganda to the country’s development since 2007 has been estimated at more than US $60 million.

SACCO The second such institution is the SACCO – Savings and Credit Co-operative, a type of co-operative whose objective is to pool savings for the members and in turn provide them with credit facilities. SACCOs encourage thrift amongst the members and encourages them on the proper management of money and proper investments practices. Whereas in urban areas salary and wage earners have formed Urban SACC0s, in rural areas, farmers have formed Rural SACCOs. There are also traders, transport, jua-kali and community based SACCO’s. These are the primary institutions for financial inclusion in Rwanda.

To conclude my discussion, this is a tailor-made country for launching the micro pensions as we did in India in the last decade piloting with Sewa Bank, Ahmedabad and Rajasthan Vishwakarma where we faced huge road blocks and teething problems for lack of systems. While in Rwanda with a well-designed systems and equally well articulated processes a contributory pension as a part of financial inclusion and social protection can be seamlessly offered to young citizens who would exclusively save for their old age using the mobile money transfer, SACCO, AFR and the Umuganda etc. and avert an Old Age Crises right from the word go, which many well-to-do nations failed to do.

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Caveat: The description on this blog is purely based on my recent visit to this wonderful country and is not intended towards either highlighting or undermining any success or failure including any governance issues or systems, nor it is related to any government agency/ies or individuals.)

Financial Inclusion Using Television Banking – A Paradigm Shift

(Potential of TVB for Capitalizing Television’s Existing Household Outreach as a Viable Banking Service Delivery Channel and Financial Inclusion)

 Backdrop: Countries like India and Bangladesh have more people glued to the Television daily rather than being online over the internet or a PC for that matter. There are more dish antennas in a village than the internet cable or WiFi in towns and needless to state that there is always an ease of operation for a TV set rather than a PC or Laptop with an internet. While financial inclusion has been most talked about means of cash transfers and prudent money management, including micro-wealth management, it has always been looked from a supply perspective. Challenges of money management are never static, nor are the solutions and hence new and innovative ways will have to be explored to provide access to finance and banking services for the rural and urban poor.

The government of MP in India has created a phenomenally inclusive model of Samrudhhi (Prosperity) that captured a complete database of its citizens and offers real time cash transfers as part of social protection to the poor in their banking accounts. It has displayed a remarkable synchronization and harmony between the Government Departments, Bankers including Central Bank, Field Level Staff and the Civil Societies. An Entitlement based benefits have started reaching to the bank accounts within a 5 kms distance from each village using the ultra-small branches or customer service points of the sub service area bank branches. However, in the next advancing phase the government is also considering a pilot for cashless banking and cashless villages as part of financial deepening that could offer regulated financial products.

Television Banking: The Television Banking (TVB) is yet to penetrate in the length and breadth of the Indian subcontinent and yet, it offers huge potential and tremendous opportunities for financial inclusion leading to cashless villages. The TVB enables customers to conduct banking business with television and TV set-top box as the terminal and remote control for the operational tool based on the cable TV broadband network. TVB exploits television’s two-way communication property, associated with digitalisation and existing reach to provide banking services such as balance enquiry, teleshopping, account transfers, remittances, buying insurance, pensions and mutual funds etc. TVB has the potential to cater to a large subscriber base, educate people about the banking services / products and offer branchless banking services thereby promoting sustainable financial inclusion and deepening.

While the concept is more than a decade older, in Indian context it has the potential of becoming another self-service channel following online banking, telephone banking, mobile banking and ATM. Globally, as of now, it has a limited number of customers, however, it will have plenty of room for development with the help and promotion of digital television technology.

There are certain pre-requisites for TVB and T Commerce such as:

Set-Top Box [STB] infrastructure to offer TV media in any of the three prevalent modes:

·         Conditional Access System [CAS]

·         Direct-to-Home or Satellite TV [DTH]

·         IP-TV services [IPTV]

Secure Message Broker infrastructure between STB and banking infrastructure.

Advantages: Compared with online banking, television banking is closer to the life of everyone. Customers of television banking do not need to purchase a computer or bear the internet "jam"; compared with telephone banking, television banking has a more direct trading interface and all-inclusive information display. Television banking enables customers to complete banking transactions through the television, have access to financial products and industry information, and experience a more fashionable and convenient micro wealth management approaches including financial literacy, the conspicuously missing element in inclusion.

While the language varies in every state, the dialect changes every 100 miles in India. The advantage of TVB towards the use of the local language would enable a more interactive environment for banking, and would help in increasing trust in the system in sharp contrast to BCs who are perceived as temporary salespersons because of the high attrition rate. Financial literacy modules including the so called ‘teachable moments’ could be offered using the TV media itself facilitating masses to learn baking activities and financial management through their favourites like Amitabh Bachhans and Shahrukh Khans. Similarly, voice input would not only make transactions easier, but also provide greater security and authentication thereby reducing frauds. The Saas - Bahu and Sensex fame can be customized for the rural poor.

As in any other state or developing nation, the Samrudhhi model in MP has been facing internet connectivity issues and hence such problems with the mobiles handsets, micro ATMs, POS etc that BCs carries could be done away with it. For, families ensure, even if through the use of inverters, that electricity supply for television is available. Finally, doing TVB in the comfort of the home will increase the overall confidence and higher level of adoption of banking habits, making financial inclusion viable and allow people to buy various regulated financial products and services.

Given the fact that most part of the developing world is yet to rollout online interconnectivity across their geographical parameters, coupled with limited basic computer know-how in remote corners, online banking channel feats can only be complemented by using ubiquitous presence of television infrastructure as a viable channel.

Harnessing Ecosystem: TV is available to the complete family, including elderly parents and the young children, while mobile phone is generally available with the earning member of the family. Moreover, the ease of operating and interactive interface may make TVB a very promising solution. Nations like Bangladesh and India have great prospects of financial inclusion using the TVB route. In India alone, the TV subscriber base has crossed 150 million households reaching on an average around 750 million individuals.  

The Governments along with their Central Banks and regulators will have to display the same level of commitment and synchronization as was showcased in MP that now follows the G – 20 Global Best Practices on Financial Inclusion. The technology for TVB and the capacity development of the stakeholders need to be firmed up. The Bankers and the governments must allocate substantial resources to develop appropriate, uniform and easy to use frontend technology and undertake pilots to test the same with different operators and geographical locations. Once an appropriate, frugal and scalable technology is achieved, TVB could have the potential to serve the masses at very low cost and little human intervention and mobilise resources for the formal financial sector. It can also offer regulated financial products at the doorsteps, nay, living room steps.

A recent report by the Asian Development Bank Institute recently made an observation about the scale of growth in China where Chongqing-based three Gorges Bank worked with its area cable operator to deliver banking services via television. While this was a new service launched in early 2013, it would provide greater accessibility and more intuitive interfaces than personal computer banking, particularly for older urban clients. If Chinese are here, Can Indians and Bangladeshis be far Behind?

Social Safety Nets for Bangladesh Migrant Workers – A Wake Up Call

Social Safety Nets for Bangladesh Migrant Workers – Wake Up Call for Government

Backdrop

In an extraordinary move, lifting a six-year ban, the Kingdom of Saudi Arabia (KSA) on February 1^st, 2015, decided to resume recruitment of Bangladeshi workers opening flood gates for the migrant job seekers. As a result of it, within the first two days, thousands of jobseekers defying the blockade and hartals (National Closure called by alliance of political parties) flocked to the capital from different parts of the country risking their lives. More than 5,000 jobseekers have already got their names registered with the Bureau of Manpower, Employment and Training (BMET) believing that the continued political violence would shrink the local job market.

Bangladesh received $3.1 billion in remittance from Saudi Arabia in fiscal 2013-14, the highest from a single country. Home to over 1.5 million Bangladeshis, the Kingdom will hire 10,000 workers from next month under 12 categories of domestic workers such as maids, drivers, housekeepers, security guards, gardeners etc.

These millions travelling for their livelihoods to more than a dozen countries are temporary migrant workers who will return to Bangladesh when their work permits expire and will need to begin life afresh as members of Bangladesh’s huge informal sector or self­employed workforce. A billion dollar remittances are being sent by these workers back to their homeland. However, a majority of their individual remittances rarely have a sustained impact on the lives of overseas Bangladeshi workers or of their families and at best result in a temporary improvement only in the consumption expenditure of the families of these overseas workers

With an equal potential to contribute towards the economic development of the country, women folk constitutes almost half of the population of the country. Women migration from Bangladesh constituted only 1% up to 2004, after which the trend reached about 5% in the subsequent years. It is interesting to note that the number of women migration is ever increasing from 1998 till date even when the overall migration declined due to global economic recession. Up to 2008, more than 80,000 women migrated to overseas employment in 17 countries. On average, nearly one in every ten Bangladeshi workers in migrating countries are women.

Need and Necessity of Social Protection

Overseas Bangladeshi Workers have traditionally been excluded from access to formal social security and retirement savings schemes available to residents of these countries. They are also similarly excluded from formal pension, provident fund and gratuity schemes available to Bangladeshi workers, if any.  Hence no mechanisms presently exist to enable and encourage these workers to save for their return and rehabilitation, health and old age nor does it provide any coverage of risk against death including accidental death and risk of longevity. As a result, and a majority of these overseas Bangladeshi workers may face the grave risk of stay back as illegal migrant workers while those who chose to come back would find no incentive to do so and are likely to be trapped in poverty if and when they return to Bangladesh and become too old to work. Women workers are even more vulnerable to old age poverty since they enjoy a higher life expectancy than men but are disadvantaged vis­a­vis men due to relatively lower incomes, a shorter working age and interruptions in employment due to child­birth and other family responsibilities. Most of the women migrant workers are illiterate or less educated which lead them to more vulnerability of exploitation.

Return and Rehabilitation: While the workers toil their wages abroad it is not uncommon that they remit more than 90% of earning back home. Women who work as house maids are provided with free food, shelter and clothing and thus remit almost everything that they earn. Back home, their folks find a temporary flip in their incomes and consume almost everything as if the remittances were meant for consumption expenditure. They not only fail to make any savings out of these incomes, but also fail to create an asset that could provide them an income generating sustainable livelihoods for future. The migrant worker is then seen more as a ‘cash cow’ that constantly milks the folks at home country as long as she remains earning abroad. Under circumstances of being non-savers, the migrant worker has no incentive to come back to the family as she has no savings, while the family back home has no inducement to welcome her permanently as it would disturb their incomes and consumption. Even if for any reason she comes back home, she would find herself even worse off than those who had not migrated out. Though her contract is for limited period she is socially and economically indebted and compelled to remain migrant, even if it requires her status to change as ‘illegal migrant’ which becomes more vulnerable to atrocities and tortures. During her long tenure abroad and being devoid of healthy and hygienic living conditions there are stronger chances of contracting various diseases. While there is no incentive for return there is also no policy or strategy to rehabilitate and internalize these workers back in Bangladesh. Thus the policy warrants a ‘Return and Rehabilitation’ strategy.

Life and Accident Insurance: The Wage Earners Welfare Board under the Ministry of Expatriates’ Welfare and Overseas Employment provides for a limited coverage on the risk of death of a migrant workers. It provides Taka three lac to the family of the deceased and covers the burial cost in Bangladesh. As many as 23,170 such compensations were paid in past ten years which is negligible when compared to the mortality factor of migrant workers.  It goes without saying that there is a strong need for broad basing and rationalizing the insurance scheme and provide a cover at the time of departure itself rather than compensating at a later stage. Both, life and accident risk need to be covered and the welfare board may also consider providing a health coverage for the migrant workers.

Pension: Most of the migrant workers who have been earning and remitting money to their homeland in their hey days are bound to land up in poverty in their old age and more specifically so when they do not have any savings, neither for return and rehabilitation, nor for fighting old age poverty. This cohort will fall back on the government for the old age pension and the safety net, if they fail to save nay, fail to be motivated to save for their old age. The cost of Inaction would be much higher in future as the population is ageing rapidly and the number of senior citizens would double within next two decades that would be full of inflation and higher life expectancy at 60. Any failure to create a funded pension liability at this stage only would lead to a socioeconomic and demographic disaster by the mid of the current century. Feedback from such target beneficiaries and interactions with a variety of stakeholders in India and their migrant countries suggested a significant latent demand and interest in such Scheme. The same may not be untrue for migrant workers from Bangladesh.

Returns & Rehabilitation and Pension & Insurance Fund

The Government of Bangladesh may consider a bundled social protection scheme for the migrant workers by encouraging them to open an account and save for the bundled product. In order to achieve mass coverage and provide the safety nets, the GoB will have to design a scheme in such a manner that it would be pro poor and attract the workers serve their objectives as a 'Demand Driven' scheme. it should be simple, voluntary, low cost, secured and affordable with substantial publicity to sensitize masses about the issues that they might face. It should also attach a sweetener and provide co contributions as top ups for the retirement savings plan that would motivate them to save and supplement their small savings. 

Examples of such schemes are available in India where ‘MAHATMA GANDHI PRAVASI SURAKSHA YOJANA [1] (MGPSY)’ offers exactly similar benefits to similar target group. It encourages and enable the overseas Indian workers by giving government contribution to:

·         Save for their Return and Resettlement (R&R), (Short term Savings)

·         Save for their old age (Long term savings for Pension) and

·         Obtain a Life Insurance cover against natural death during the period of coverage.

The government contribution available under the MGPSY is for a period of five years or till the return of subscribed worker back to India, whichever is earlier.

The main attractions of MGPSY are:

Government top up contribution of Rs.1,000 per annum in line with Swavalamban platform for all MGPSY subscriber who save between Rs.1,000 and Rs.12,000 per year in NPS-Lite.

An additional government contribution of Rs.1,000 per annum for the overseas Indian women workers who save between Rs.1,000 to Rs.12,000 per year in NPS-Lite.

A special government contribution of Rs.900 by MOIA towards Return and Resettlement (R&R) of the overseas Indian workers who save Rs.4,000 or more per annum.

A life insurance cover under the Janshree Bima Yojana for risk against natural death and death due to accident.

MGPSY is a specially designed social security scheme for the Ministry Of Overseas Indian Affairs for the millions of blue-collar overseas Indian workers recognized under the ECR category spread across the 17 countries. MGPSY is a unique and integrated package of three carefully chosen, well-regulated, and independently managed financial products/platforms existing in the market

Government Commitment: Over last few decades, the Government of Bangladesh has demonstrated a sustained and deep commitment to achieving high inclusive economic growth and has taken a number of important steps to improve livelihoods opportunities, incomes, employment opportunities and social safety nets for Bangladesh’s vast informal sector workforce. Even the ‘Vision 2021’ is committed to poverty reduction and further deepening the past progress by not only addressing the root causes of poverty, but also by lowering the impact of vulnerabilities faced by the poor and near-poor population . Government’s strong commitment to social protection is also depicted in its budgetary allocations that increased from 1.3 percent of GDP in 1998 to 2.5 percent in FY 2011. Even the Sixth Five Year plan (2011 – 15) depicted strong commitment on accelerating growth and reducing poverty and provided strategic directions and policy framework. However, there is a strong need and commitment for the Government of Bangladesh to provide a safety net to this cohort and other informal sector workers and extend the inclusive policy to benefit the million of overseas Bangladeshi workers.  

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[1] The author, Kavim V Bhatnagar along with others from Invest India Micro Pension Services has conceptualized, designed and been the architect of the MGPSY. The scheme was rolled out by the Government of India in 2012 and has started providing social safety net to blue collared  Indian Diaspora. 

Indian Independence Day Gift – The New Avatar of Financial Inclusion Drive

[Government would do well to ‘Target the Outcome of Financial Inclusion Drive’ as a ‘Means’ and ‘Not an End’ to ‘Attain Overall Prosperity’. – Use the FI Drive for Inclusive Growth and Not an End on merely Banking Inclusion]

The current policy objective of inclusive growth with financial stability cannot be achieved without ensuring universal financial inclusion and bridging the gap between the supply and demand side on one hand and lead the vision of inclusive growth on the other. The Government of India is likely to provide a positive impetus and boost the ongoing financial inclusion drive by unveiling a comprehensive program envisaging banking account along with an insurance and pension cover, apart from a default cover for lenders.  The NDA Government’s drive is likely to be opening 150 million more bank accounts, 120 million of which will be in rural areas over next four years.  Apart from providing basic banking accounts, pension and insurance services, the government will also focus on financial literacy as well as creation of a credit guarantee fund for coverage of defaults in overdraft accounts. The government plan also proposes to channel all government benefits (Centre, state and local body) to the beneficiaries using these accounts and pushing the Direct Benefit Transfer (DBT) scheme of the Union government.

This is certainly a big giant leap to inclusive growth in the regulated financial sector and the formal announcement shall be made by the Indian Prime Minister on the Independence Day (15^th August) next month. However, there are certain issues that the Government as well as the Central Bank ought to reckon with before embarking such an ambitious plan. Globally, a paradigm shift is being observed in the micro space which draws one’s attention from the financial institution ‘back to the client’. Indicators of a renewed concern for clients include research to quantify the ‘unbanked’, rallying calls for consumer protection, and efforts to better meet customer needs with diversified products. A key driver of this change in focus is the now widely embraced goal of ‘financial inclusion’. Governments in developed economies, in G 20 summit agreement, have recognized financial inclusion and consumer protection as integral to achieving financial stability and integrity as a multidimensional, pro-client concept, encompassing ‘improved and increased access’, ‘better products and services’, and ‘better use’

Need for Financial Literacy Along With Inclusion: The challenge in developing nations like India is that without the third element, ‘use’, the first two, despite the best efforts of the Central Bank as well as the Government, at best are worthless. Technological innovations are bringing both new customers, potentially including millions of unbanked cell phone owners, and new service providers – a diverse array of retail outlets, telecoms and others into the market. Diversification of products and services has already started resulting in rich, and complex, choices for consumers, especially compared to the early days of one-size-fits all working capital loans. Yet, increased access and better choices do not automatically translate into ‘effective use’. The path from uptake (i.e. opening an account) to usage is still an uncharted course. For, ‘effective use’ is hampered by asymmetries of information / literacy and power between financial institutions and poor consumers, an imbalance which grows as customers are less knowledgeable, illiterate and inexperienced while the products they can choose could be more sophisticated. Financial education is an important tool to address this imbalance and help consumers both ‘accept’ and ‘use the products’ to which they increasingly have access. As it facilitates effective product use, financial literacy becomes critical to financial inclusion and can help clients to both to develop the skills to compare and select the optimum combination of products for their needs and empower them to exercise their rights and responsibilities in the consumer protection equation. Current developments in microfinance sector including RBI’s concurrence to allow NBFC MFIs to be BCs are both exciting and potentially perilous. To take advantage of the former and protect against the latter, those placing the client at the center of their efforts have to be embracing financial literacy.

Challenges : Challenges of money management are never static, nor are the solutions. Therefore the Central Bank and GoI have to be watchful in launching the drive along with a prudently designed financial literacy tool that is tailored to the client’s specific context, helping them to understand how financial instruments, formal or informal, can address their daily financial concerns, from the vagaries of daily cash flow to risk management. Its power lies in its potential to be relevant to anyone and everyone, from the person who contemplates moving savings from under the mattress to a community savings group, to the saver who tries to compare account choices offered by competing MFIs and banks. As such it spans the informal and formal financial sectors, innovatively supporting clients’ access to, and more importantly, ‘use of’, diverse financial services. The ‘use’ factor is an element of innovative and effective financial education because when the client applies new knowledge and skills, she increases her chances of retaining them. Therefore, some of the best opportunities for financial literacy occur when the target group faces new financial situations or decisions. These are ‘teachable moments’; the learner might be in transition from the familiar to the unfamiliar, or have an opportunity that will be enhanced with relevant information and skills on a more permanent and sustainable basis.

Ownership of Inclusion: The Government would do well to target an outcome of the financial inclusion drive as attaining overall prosperity and not use the financial inclusion as an end in itself. Earlier drives of Financial Inclusion were limited to targeting opening up of banking accounts and India has a classical case distinction where millions of such no frill, zero balance accounts remained in the core banking without a single transaction. In fact, many of such accounts holders are not even aware that they possess a bank account, as they do not Own it. Thus the literacy drive and awareness campaigns should be targeted to make people realize that they actually ‘Need’ a bank account for a variety of purposes and the same has not just been offered free to them to complete the targets of the bankers. Awareness campaigns should be held in a camp mode and in order to resolve multiple issues like the KYC (Know Your Customers), bank account opening, G2P (Government to People), credit availability etc., GOI should hold camps to expand the interaction and interface between the lenders and borrowers. It should target more direct interaction between them so as to resolve various issues of negligence and knowledge using different camp modes where stakeholder bankers including Regional Rural Banks (RRBs), Self Help Group (SHG) members, NABARD (National Bank for Agriculture and Rural Development) and even government officials share a common platform and resolve ‘on spot’ issues. At supply side there is a need to sensitize the banking officials including BCs and BFs who interact at the grass-root level and interface with rural public at large. This may include, but not limited to human relations and skills in meeting customers, strategically planning increasing the customer base, broadening the scope of financial services and deepening the availability of products and cash in the system. The FI drive should encourage individual women / SHG members towards Voluntary Savings by assisting them open individual bank accounts, revive existing “no frill accounts” and depositing the surplus to facilitate and steadily graduate from community banking to individual banking. Bankers should organize capacity building workshops and training of trainers to train SHGs and individuals towards encouraging them to save individually. As the increasing reach for banking access has been an area of concern the bankers should ensure coverage of all unbanked villages in the identified areas over next 2 years with an emphasis on increasing rural accounts by opening of bank accounts for all eligible individuals and an increased savings and banking pattern. Similarly, there lie large chunk of accounts that are rarely or never used and hence increasing transactions on these accounts shall be the focus area of the drive.

Suggestions: The Government should reconsider the decision of a phased financial inclusion drive and instead perform literacy, banking accounts and offer other regulated  products in a single phase. It makes little sense to open a bank account in year one and then teach them its usage in year 2 and offer saving products in year 3. In most case, people tend to forget that they even got an account opened in year 1 and learnt about something like a saving, insurance and pension product  in year 2 and finally wait for it in year 3. Opening of bank accounts should not be treated as an end to FI and instead be treated as a means to attain ‘Overall Prosperity’

(The blog article also acknowledges a commissioned workshop paper by Monique Cohen and Candace Nelson of Microfinance Opportunities, USA)

The Smart Constable at the Polling Booth and Senior Citizens

[West Became Rich Before Becoming Old, East is Becoming Old With Greater Poverty,(Before Becoming Rich). Unfortunately, India has never factored Demography into its Policymaking]

We (in India) are in the process of conducting World’s Largest Event – The Parliamentary Elections, where more than 800 million voters are exercising their franchise to elect more than 542 Parliamentarians in World’s Largest Democracy.

Senior Citizens as Voters: One marked difference in Indian elections this year has been the growing number of senior citizens as voters. I was on a polling booth at my hometown Indore and observed an early morning interesting phenomenon. A decade or two ago when we used to go for voting, there used to be a special queue for the senior citizens. Probably, the numbers were limited within a single digit of percentage of the overall population and for obvious reasons it was treated normal. However, in the current elections in 2014, the majority of the voters as observed in the morning session were senior citizens and the constable on duty as well as the polling staff had a tough time to provide for a special queue for them. Since most of the voters at the booth were senior citizens, they had to wait for their turn rather than having a cake walk to the polling officer as they used to do earlier. Looking at the pressure of some genuinely older very senior citizens, the constable on duty wisely decided to create a special queue for only the very senior citizens and announced the privilege for voters in the 75 + age group. This allowed a lot many, very senior citizens (aged 75+) to franchise their votes conveniently. So is it that the population of senior citizens in India growing leaps and bound? Or is it that the cohort of voters aged below 60 lazier and would relish the holiday morning at bed and come to vote only at mod day? Or are we having a trend where the senior citizens are more enthusiastic to vote than their children? As I am a voter in a posh locality of the town I thought that most of the health conscious morning walkers / senior citizens had casted their vote early in the morning and there was nothing amiss in the phenomenon. But having stayed back at the booth and observing the trend during the day and getting feedback from friends and relations from other booth  I realized that there was a ‘Special Phenomenon’ that could perhaps Not be ignored.

Demographic Explosion in Greying Population: Greater Longevity, Higher Life Expectancy at 60 (18 for females and 17 for males), Lower Fertility etc. have played a significant role in Indian demographics in recent times. India's population aged 60 and older is projected to increase dramatically over the next four decades, from 8 percent in 2010 to 19 percent in 2050, according to the report by the UNFPA. The report has projected a rapid increase in India’s median age to 31 years in 2026 (it was 20 in the 1980s) and has also projected a 326% increase in the number of people aged between 60 and 80 by the year 2050 (from the year 2000); a 700% increase in the number of people older than 80; as against  a mere a 55% increase in the country’s overall population. By mid-century, this age group (60+) is expected to encompass 323 million people, a number greater than the total U.S. population in 2012. UN projections suggest that India is “gradually but surely transitioning away from a young age structure with the elderly population soon outnumbering children in India”. It will have significant implications for policymakers as well as businesses in a country that touts its ability to reap a so-called demographic dividend of a young population as one of its competitive strengths. Unfortunately, India has never factored demography into its policymaking

Implications: The profound shift in the share of older Indians—taking place in the context of changing family relationships and severely limited old-age income support—brings with it a variety of social, economic, and health care policy challenges. India is yet to define and target solving these issues and challenges. Dismemberment of Joint Family Structure has compelled senior citizens to live in rather loneliness, with share of older Indians living with only a spouse or alone doubled between the early 1990s and the mid-2000s. The aging of India's population will also lead to increases in the preva­lence of chronic conditions such as diabetes and hyperten­sion. By one measure, nearly one-half (45 percent) of India's disease burden is projected to be borne by older adults in 2030, when the population age groups with high levels of chronic conditions will represent a much greater share of the total population. Despite India's recent rapid economic growth, the majority of older Indians remain poor. A Single digit percent of them have a pension of any sort. Savings Exclusively for their old age is never on the horizon and sometimes difficult for a majority of Indians because of low earnings, indebtedness etc. where a large share of the aging population lives unbanked in rural areas.

Recalling Constable at Polling Booth:   Allow me to recall the Smart Constable at the Polling booth mentioned earlier. He smartly segregated the senior citizens and redefined the shift by created a Queue for 75+, ignoring those in the age group of 60 – 75. What implications can it have? Do we raise the Senior Citizen age to 75 as more and more people join the older cohort??? Should we raise the Retirement age of the working population? Will it actually help??? While it certainly helped him manage the crowd on the day of polling, it also gives us an important lesson to learn. Since we have a higher life expectancy at 60 and chances of living over multiple decades thereafter, does it mean that we should increase the earning tenure and reduce the retirement tenure by raising the age to work from 60 to 75? Can we resolve the crises by working for an extra 15 years and hence reduce our dependence of our savings by one and half decade? Or at Worst, are we not Compelled to Work till the End?? Are we capable of doing it?? If compelled to work, will our physical capabilities allow us to work or is it only out of compulsion? With people living well over 80, and most of the younger cohort today would continue to live upto 90s, ‘Non-earning years shall be more than half of one’s earning years’. With little old-age income support and few savings, labor force participation remains high among those ages 60 and older, particularly among rural Indians. Evidence suggests that not only does a large share of the elderly earn income, they also support their adult children who often live in homes and work on farms owned by their parents.

While there are no readymade solutions to such problems it’s high time Indians took decision to start saving exclusively for their old age. The Government of India is promoting the National Pension System (NPS) through the regulated mechanism of the PFRDA. To extend the coverage of NPS to the weaker and economically disadvantaged sections of the society with their limited investment potential, PFRDA has launched NPS- Swavalamban which specifically targets the marginal investors and promotes small savings during their productive life. It aims at building up a corpus sufficient enough to buy an annuity for their old age. It and has also offered co contributory pension scheme under the Swawalamban benefits where the GoI tops us the pension contributions to certain extent and under certain conditions for workers in the informal sector. Swavalamban Scheme grants an incentive of Rs 1000 pa to all eligible NPS / Lite accounts, if they meet the prescribed criteria. (More about NPS Swawalamban in the next Blog). While India has started waking up for the crises, neighboring countries like Bangladesh, Nepal et al that share similar demographics require aggressive shake up.