GOVERNMENT BANKING AND

INFORMATION NETWORKS

International Conference on
“Public Financial21Management for
Improving Program Delivery”

Presentation by Shri O.P. Bhatt,

Chairman, SBI
21st October 2008
1
21st OCT 2008 2
21st OCT 2008 3
 “ALL FOR THE BEST”
• While playing with a sword, Akbar chops off the tip
of his little finger accidentally.
• Birbal immediately says : “Everything that happens
has a purpose behind it & that purpose is for the
good.”
• Akbar gets angry & throws Birbal in jail.
• Akbar bandages his finger & goes into the forest to
hunt. Gets separated. Is captured by cannibals &
taken before the temple to be sacrificed.
• Temple Priest examines Akbar. Announces that
Akbar cannot be sacrificed as he was not a perfect
specimen since the front portion of one finger was
missing.
• As Akbar was not fit to be sacrificed, he is released.
 ALL FOR THE BEST
• On his return, Akbar thanked God for injuring his
finger & thereby saving his life. He then went to
meet Birbal in prison & apologised to him for
imprisoning him saying “Now I understand how
my injury was for the best. But tell me, why did
God allow me to imprison you? How was it for
your best ?”

• Birbal says “ If I had not been in prison, you

would have taken me with you for hunting. When
the cannibals rejected you for their sacrifice, they
would have found me an excellent substitute.”
It is helpful to see the good side of what appears
to be a bad event.
Banking and Information Networks
Discussion Agenda

™Role of Government Banker

™Its Information Network
™Expectation of Government
™Key Concern Areas
™Programme Delivery with respect
to above

21st OCT 2008 6

 SBI AND THE GOVERNMENT

Relationship dating back to over 202 years

™ The three Presidency Banks viz. Bank of Bengal (1806), Bank of

Bombay (1840) and Bank of Madras (1843) supported the public
credit of the Government and helped the Govt. raise loans

™ Amalgamated in 1921 to form Imperial Bank of India

™ Entrusted with the task of managing the public debt operations of

the Government and was the Central Bank of the country till the
establishment of Reserve Bank of India in 1935

™ Since 1st July,1955 SBI is the main banking arm of GOI, handling
a large chunk of its entire business

21st OCT 2008 7

 SBI - CORE BANKING PLATFORM
THE LARGEST IN THE WORLD

• 100% of the business is on CBS

Centralized
Banking • 11,400 SBI Branches : 4500 Associate Bank Branches :
System • 84 Foreign Branches across 32 countries
(CBS)
• 200 Million Accounts : 35 Million transactions per day

• 8500 ATMs : Over 2 million transactions per day

• Total Debit Cards: 30 Million
Delivery
• Internet banking services for 1.63 million retail customers
Channels
• Integrated with other Delivery Channels RTGS, NEFT
• Integrated Financial Inclusion : Over 1 Million Accounts

• Scalable architecture, ready for both organic and inorganic growth

Growth • Technical merger of State Bank of Saurashtra with SBI was accomplished
overnight

21st OCT 2008 8

 Technology
For The
Customer

• SBI 100 % NETWORKED GLOBALLY

• LARGEST NETWORK OF
BRANCHES
• LARGEST NETWORK OF ATMs
21st OCT 2008 9
 Government Banking is largely
driven by commitment to the
nation than by commercial
considerations

21st OCT 2008 10

BANKING AND INFORMATION NETWORKS - SBI
MODEL
Requirements of the Government Govt.-2-Customer
™ Fast And Efficient Tax Collection
(Tax collections,
Mechanism payments, .. )
™ Timely Settlement Of Funds

™ Real Time MIS Govt.-2-Business

™ Timely payment of benefits (TUF, Subsidies,

(pensions, NRHM, NREGA Vendor Payments…)
stipends, SSA etc) to the intended
target groups through their
accounts Govt.-2-Employee

™ Efficient and speedy transfer of (Pension, Salary

funds through Cash Management payments, …)
Product (CMP) , RTGS, NEFT, etc.

A large banking network to cover the length and breadth of the country
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 PROGRAMME DELIVERY

Our Programme delivery

focuses on building institutional
capacity for change

21st OCT 2008 12

 GOVERNMENT NEEDS
Ensure effective
program delivery
making use of its
network of
branches and
Recognize that other channels
Commitment to
Govt. business
National
will be largely
objectives rather
driven by large
than only
volumes than Requirements commercial
by high margins of the considerations
Government

Facilitate
Cater to crucial
periodic audit in
MIS requirement
a cost effective
of the Govt.
manner

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 PROGRAMME DELIVERY –
PROCESS STEPS

™Discard old business models

™Adapt newest technology

™Transform Services

21st OCT 2008 14

 SBI & GOVERNMENT - TECHNOLOGY
ARCHITECTURE
Payments Receipts Remittances
1. Pension 1. OLTAS 1. Cash Management
2. Income Tax Refund 2. EASIEST Product
3. E-Tax 2. RBI’s NEFT & RTGS
Order
4. E-Freight
3. NREGS Payments / 5. Cyber Treasury
Bhamasha 6. Centralised Settlement
4. Subsidies (TUF) and reconciliation of
5. Credit Linked Capital PPF
7. Akshaya Project
Subsidy for SSIs

Payment Gateway Centralized

Accounting
Software
Core Banking Solution (CAS)
Business Process Management

Processing
Centers for
managing Govt.
business
LARGEST NETWORK – SCALE ON DEMAND

Branchless
Banking
Branches

CPC Business Rules

Back office
Operations operations
High Volume Operational
Core
Handling Conveniences
Information
Engine

Products Legacy
Interfaces
Channel Agents/
Integration Post Office

MIS
 INFORMATION NETWORKS
CHALLENGES
™Network availability
™Connectivity
™Ensuring Reach
™Managing Complexity
™Reliability
™Robustness

Resolution –
Process steps
21st OCT 2008 17
 Pension Payments

™ Centralized Pension Processing

Centre setup across the country
covering 2.61 million pensioners

™ Hassle free pension payment across

the country on the same date

™ Quick and effective reconciliation and

audit

™ Efficient fund settlements

SBI was amongst the first two banks to pay the
arrears to Central Govt. pensioners on account of
revision under 6th Pay Commission.

… processed, calculated and paid in a record time

of 4 weeks !!
 Funds Flow Process
CENTRAL ACCOUNT OF NRHM

STATE (1) STATE (2)

ACCOUNT ACCOUNT

District Vendors District Vendors

A/C A/C

Block Vendors Block Vendors

Beneficia Vendo Beneficiar Vendors

ry rs y

21st OCT 2008 19

Funds Allocation and Disbursement Process

This is four tier transfer process i.e.

Central Transfers funds to State

State will transfer funds to District
District in turn transfer to Block and
Finally Block will transfer to beneficiary

The functionality of payments to various vendors and salary

expenses is also included in this application.

21st OCT 2008 20

Sanction and Disbursement Process

MAKER
Maker will enter the details and
On Referral for refers to Checker 1
modification
CHECKER 1
Sent for
Checker 1 can see pending
approval
transaction for 1st level
approval On Referral for
modification

On Referral for
final sanction CHECKER 2
Checker 2 can see pending
transaction for final approval On approval
cheque will be
issued
R
s.
21st OCT 2008 21
Main Modules
This application contains three main modules
™Budget Allocation
™ Funds Sanction & Disbursement
™Funds Reallocation and Returns
Budget Allocation
Through this module the user can enter the allocated budgets to
various schemes . This is the base amount out of which the amount

Funds Sanction & Disbursement

This module will facilitate funds sanction and disbursement to
various down the line units basing on the user logged in.

Funds Re-allocation & Returns

The funds received under a specific scheme can be re-
allocated to other schemes with in the available amount. The un
utilised funds are to be returned. These two functionalities are
available under this module.
21st OCT 2008 22
Reports

This application will facilitate generation of various reports

for different level of users.

™ Sanction Status Report

™ Funds Disbursement Report
™ Outstanding funds Report
™ Funds Reconciliation Report
™ Budget Utilisation Report

Planning to develop query based custimised reporting system

21st OCT 2008 23

 PAYMENTS
Payment of Social Security Benefits
™ SBI is working with the Govt of Andhra Pradesh to enable payment of Social
Security Pension and payment of stipends under the National Rural
Employment Guarantee Scheme (NREGS)
™ Over 1 mn ‘No Frills’ savings account have been/are being opened in the names
of the beneficiaries, into which the Govt benefits are paid
™ ‘SBI Tiny Cards’ based on smart Card technology provided to the beneficiaries
who can withdraw money/deposit money by simply swiping their ‘SBI Tiny
Cards’ on a hand-held device with the Business Correspondent/Business
Facilitator in their village. SBI tied up with INDIA POST for this purpose
™ SBI is also working closely with Govt of Rajasthan in the ‘Bhamashah’ scheme
for upliftment of families below poverty line
™ ‘SBI Tiny Card’ to enable

– Payment of insurance premia

– Payment of SIP Mutual Funds
– Recharging of Mobile phones
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 RECEIPTS
Online Tax Accounting System (OLTAS) / Electronic Accounting
System in Excise and Service Tax (EASIEST)

™ Online Direct Taxes Collection of Govt. of India (Income Tax /

Corporation Tax etc)
™ Banks are reporting transactions through electronic strings to RBI for
funds settlement and to the website of TIN of CBDT for update of
Assessee data
™ Data extracted at SBI’s state-of-the-art data centre at Navi Mumbai
the same day and processed funds settled on the next day itself
™ Enabling Govt. to view their collection of Direct Taxes throughout the
country on a daily basis
™ Central Excise & Service Tax Collection is done similarly

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 RECEIPTS
E-Freight
New Venture Jointly with Indian
Railways
• Facility of e-payment of
Railway Freight to corporates
• 91 corporates covered till date
with volumes of Rs. 520 crores
E-Ticketing
Railway Ticketing through the
Bank’s INB product
• Booking of Railway Passenger
Tickets through internet
banking
• Currently 17.7% of total tickets
sold on Western Railway are
booked online
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 RECEIPTS
Cyber Treasury
• Technology partnerships with
various State Governments
• Large number of small value taxes
– commercial tax, VAT, CST, etc.
remitted by public through internet
• Remitters get a cyber receipt
• Project running in 6 states, MP,
Haryana, Chattisgarh, Gujarat,
Rajasthan
• Electronic MIS is provided to the
State Governments
Centralised Settlement and
Reconciliation of PPF
• Centralised Settlement and
Reconciliation System setup
wherein all PPF transactions
taking place at all 4500 branches
hits the Bank’s centralised system
simultaneously
• Timely settlement of funds with
RBI
• MIS to the Govt to enable Govt to
monitor & better manage its
liquidity
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Corporate Internet Banking (CINB)
NSDL Site Pay Tax Online
 Select Challan Type

•280 – Income Tax, Corporation Tax and Wealth Tax

•281 - TDS - Company and Non- Company Deductees.
•282 – Securities Txn Tax, Gift Tax, Estate Duty, Interest Tax etc.,
 Enter Challan Details

State Bank of India

Confirm Assessee Details
Logon to OnlineSBI
Enter Tax Details
Confirm Payment Details
Print Counterfoil
 SBI : REFUND BANKER
FOR INCOME TAX REFUNDS

– Income Tax Dept / its ZAOs send payment files electronically

through National Computer Centre,
Delhi with Digital Signature to SBI at CMP Branch, Mumbai

– SBI
• segregates payment data
• Arranges for electronic payments as per ECS discipline (Direct
Credit through Core Banking, NEFT/RTGS)
• Prints paper-based instruments (Drafts/Cheques)
• Advises ECS rejects to ITD
• Issues paper based instruments for rejects on ITD advice
• Arranges for direct despatch by courier of paper instruments
and advices
• Sends MIS with Digital Signature to ITD/ its ZAOs/NSDL
 GOVT. PENSIONS – POST-CBS
Physical flows

REDESIGNED PROCESS Online flows

Credit

Pension A/c 1 CPPC Cell

Pension A/c 2 GAD Belapur RBI Nagpur
Pension A/c 3
Pension A/c 4
:
:
:
Day 1 Day 1 Day 1-2
:
Pension is Electronic report is GAD Belapur
calculated and generated and settles the figures
Pension A/c 10001 credited centrally settlement figures with RBI Nagpur
Total xxxxxx from CPPC advised to GAD
Belapur

Scrolls are sent to the

PPA

PPA
 INSTANT FUND TRANSFER

™ Food Corporation of India

– Instantaneous transfer of funds, at 3000+ branches eliminating delays &

reconciliation issues
™ ONGC

– Online vendor payments across the country enabled by SBI

™ IOC

– Same day credit to IOC for Dealer transactions across the country either
online or through sweep facility

™ Ministry of Agriculture

– All Pay and Account offices under the Ministry are making Vendor
payments electronically through our CMP. This is shortly being extended
to Department of Revenue (MoF) and Ministry of External Affairs

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 OTHER INITIATIVES

™ AKSHAYA
– Tie up with Akshaya Project of the Kerala state IT mission
– Providing payment gateway for channelizing the proceeds of various utility and
other payments collection done at Akshaya centres (kiosks) through INB
– All bill collections are credited to the State government through online SBI
™ Jeevan
– Partnering with the State Government of Delhi in providing services at the Citizen
Service Centres called ‘Jeevan’ being set up by them
– Everything from Birth Registrations to issue of Death Certificates will be handled
by ‘Jeevan’
™ NRHM (National Rural Health Mission)
– Partnership with the Government to provide interphase through CBS
– Accounts of Health Departments at Central/State/District levels can be monitored
at the apex level
– Will enable Government to monitor their spending under NRHM and ensure
delivery to the beneficiaries
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 GOVERNMENT BUSINESS – THE ROAD AHEAD

™ Immense potential for partnering with the Government in a mutually

beneficial relationship
™ Information networking will play a pivotal role in expediting inflows,
greater transparency and reducing transaction costs for the
Government as well as banks
™ Web based technology to build state level information to allow for
the unification & integration of services
™ Appropriate mix of technologies for multi-channel integration

™ Centralized Servers to enable each Internet computer to serve as a

terminal for many information systems
™ Effective monitoring of performance and improved decision making

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 BENEFITS OF PROGRAMME
DELIVERY
Government Bank Customers

1. Superior Financial 1. Expanding reach 1. End to End Service

Planning 2. Multichannel Service
2. Ability to handle large
2. Real Time customised volumes 3. Faster Service
MIS
3. Lower transaction cost 4. Doorstep Service
3. Effective Reconciliation
4. Launch new product and 5. Brings overall system
and lesser need for
services with Govt. transparency
Audit
6. Hassle free service
4. Faster Fund
disbursements and
Receipts
5. Save borrowing costs

GOVERNMENT BUSINESS IS TECHNOLOGY ENABLED BUSINESS 43

 PHASES OF GOVERNANCE
™Meticulous Planning (Action Plan –
Vision )
™Identify the objective clearly
™Increase IT Literacy and awareness
regarding benefits
™Understand the requirements
™Management should be open to changes
™Involve employees in project
implementation
™Realistic timelines
™Institutionalize projects – not to depend
on individuals
21st OCT 2008 44
CRITICAL SUCCESS FACTORS
™Recognize the successful leaders, in
various forms
™Proper Monitoring of the Projects
™Follow the Best Practices in including
learning and re learning for all
stakeholders
™Build interconnected National
Database

21st OCT 2008 45

 SUGGESTIONS
REQUIREMENT TYPE OF
Reducing the cost of transacting with APPLICATIONS
Electronic delivery of
government for citizens, enhancing services to citizens in
revenue, greater transparency and rural areas
reduced corruption
Citizen engagement and empowerment, E-Participation
transparency in government and banking
operations
Transparency in public financial Back Office
management improved expenditure automation
control, enhance productivity of employees
Effective monitoring of performance and Data gathering and
program impacts, improved decision MIS
making

21st OCT 2008 46

Thank You

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