Network Past Issues

IS SMART CARD REALLY SMART?
S Sarath

As part of Management Traineeship Segment (MTS) I attended a workshop on smart cards along with Piyush Singh (PRM31) at the office of Commissioner of Rural Development (CRD), Department of Rural Development, Govt. of Andhra Pradesh. Our MTS project was “Comparative study of different payments systems for disbursement of MGNREGS wages and Social Security Pensions” under the guidance of Prof. Atulan Guha. During this period, we along with others who went to CRD got an opportunity to attend the State Level Workshop. This short write-up summarises the insights from this workshop.

An overview of Smart Cards
Before getting into the details of the workshop,  I would like to give a brief overview of Smart Card project in A.P. GoAP through Rural Development Department implemented a Financial Inclusion Initiative to set up banking outposts in the villages in concert with various banks to disburse government entitlements including National Rural Employment Guarantee Scheme – Andhra Pradesh (NREGS-AP), Social Security Pensions Scheme (SSP) as well as other financial services through Smart Cards in all districts of the State under ‘One bank – One district’ model/ Service Area approach. The work estimates and wage payments are also handled to enable timely payments and atleast 100 days of wage employment to a wage seeking household within a year. In Andhra Pradesh there are two systems of wage payment a) Manual and b) Electronic benefit transfer system (EBT). In manual system there are some issues related to leakage and delay of payment. To address these issues and to bring transparency, Govt. of Andhra Pradesh partnered with private sector to pay all MGNREGA wage payment and SSP through EBT. The Government has entered into MoU’s with several banks and also Department of Posts for implementing the Smart Card Project. The Banks in turn have engaged services of various Technology Providers and Business Correspondents for implementing the project. This is arguably the most significant biometric payment system in the country with 19 million beneficiaries in 22000 villages across all 23 districts and a record off over Rs.3300 crores already paid. Inspite of significant achievements made so far, the systems and processes needed to be substantially improved to make this project a national standard and sustainable model in financial inclusion.

As per the terms of MoU, 100% carded payments should commence in all the GP’s allotted to the Bank within 6 months from the date of signing the MoU. In most of the districts, Government has not been able to achieve 100% enrollments and 100% biometric payments, in spite of the constant follow up made by them with all the stake holders and support extended financially by way of payment of service charges and sanction of the cost of POS machines as a grant to willing agencies. This is done in addition to the support extended by way of full-fledged Smart Card Project Team at State level and Electronic Benefit Transfer (EBT) coordinators at the district level. Most of the banks were not able to complete the payments within the stipulated 14 days which puts the beneficiaries to hardship. Thus the workshop was conducted with the following objectives: 1. To achieve biometric authentication of all payments; Eliminating the scope for frauds arising out of manual payments; Enabling instant enrolment at village level; Enabling instant biometric payment after enrolment. 2. Completing MGNREGA payment within 4 days of receipt of funds and e-Pay Order. 3. To provide for timely feedback and control systems. 4. To visualize a transaction-based MIS and Decision Support System. 5. To enable prompt reconciliation and sharing of disbursement data. 6. To promote a sense of purpose and synergy among the stakeholders.

The Workshop
A State level Workshop on “Best Practices and Re-engineering of Processes for Smart Card Project in A.P” was conducted by Commissioner of Rural Development, Department of Rural Development, Government of A.P. The two day programme on 16th and 17th Novemeber, 2011 held at Tungabhadra Conference Hall, Dr.Marri Chenna Reddy HRD Institute of A.P, Hyderabad was beneficial in the sense that it not only gave insights to develop our MTS report but also it dispelled some of my myths about the so called Governance deficit when I saw the State Government taking pro-active measures to correct and rectify the problems in discussion along with all stakeholders. Key functionaries and decision makers from Government of A.P, Banks, Technology Service Providers and Business Correspondents from Central Office, State and District Levels were a part of the workshop.

 Day 1 started with a welcome address by Additional Commissioner, RD. Major agenda of the day was to focus on Process Re-engineering. Three panel discussions were the highlight of the day. Panel I was on “Instant Enrolment, Account Creation & enabling Biometric Payments.” Panelists included CEO of FINO, ALW, Atyati, AP Online, Project Manager (FI) of ICICI, GM Corporation Bank and Project Director, Medak District. Panel II was on “Capacity building and Coordination among the different Stakeholders.” Panelists included Project Director, Krishna District, CEO of Integra and ALW, Deputy Vice President AXIS, Deputy GM Andhra Bank and Chairman APGVB. Panel III discussed and presented on “Completion of wage payments within 4 days.” Panelists included PMG-Dept of Posts, DGM-UBI, AGM of SBI and SBH, VP-FINO and Project Director of Vizianagram District. These discussions and presentations did bring out the lacunae in the system and how to plug those upto certain extent.

Day 2 was devoted for Field level issues and coordination problems. It started with district wise presentations made by the EBT Coordinators. It was followed by district wise presentations by the Coordinators of Technical Service Provider. An open discussion was held on submission of disbursement data, reconciliation and return of undisbursed amounts by the bank to the Department. Action Plans by the District Coordinators were discussed. Some other issues raised were on timely payment of remuneration to CSP’s and delivery of basic banking services & allied services to the villagers. The closing remarks were given by the Project Manager (Smart Cards), A.P.

Take-away
Certainly there were many take-aways from the Workshop. Best Practices for adoption and improvement in implementation of A.P Smart Card Project were identified and conveyed across the various stakeholders. Gaps were identified in failure to reconcile the payments vis-à-vis releases and return of unspent money to avoid systematic frauds and audit objections. Revamping of cash supply procedures and tracking and monitoring mechanism for cash supply by Department of Posts were accepted as strategy to improve upon. Technical Service Providers were advised to get the list of un-enrolled beneficiary data & communicate the enrollment schedule to mandals and MPDOs for motivating the beneficiaries for enrollment on schedule dates. To complete the 100% conversion to Smart Cards, they were expected to expedite the campaign mode Laptop door to door enrollment in Agency Mandals. The delay compensation system wherein the penalties will be imposed on the party delaying the payment process to beneficiaries was also accepted across the hall. The workshop ended on a promising note that all stakeholders would improve upon their processes so that these 22,000 villages in A.P can set themselves as examples for the 6 lakh villages in India to follow.
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The author can be contacted tat Email: sarathsubash@gmail.com