New Delhi: Urban banks adopted automation a long time back, linking their branches via core banking systems (CBS). Slowly, but surely, India’s cooperative banks are now emerging out of technological dark ages. Large parts of the sector now tick with a CBS developed by the National Informatics Centre (NIC), the government’s web services organization, which has brought them to the technology mainstream.

The NIC’s cooperative core banking solution(CCBS) works on the Software as a Service (SaaS) model. The software runs from a remote central server, which individual banks access for their purposes via Internet. NIC hosts the service, besides providing implementation support.

“E-governance and bridging the digital divide was largely restricted to urban areas or cities, but the people in rural areas were ignored. The business correspondents’ model also didn’t pick up the way it should have in the rural areas. This is our attempt to address some of the concerns around financial inclusion," explains Shefali Dash, deputy director general of the NIC.

Apart from basic banking operations, the CCBS also integrates other services. It is designed to help agriculture societies disburse funds from various government schemes like the rural wage scheme, old age pensions or the mid-day meal scheme directly to beneficiaries’ accounts. The system can also monitor disbursements and update position of funds.

Easing the disbursement of funds from the government schemes was a key reason for developing the core banking service. NIC developed a solution, which was infrastructure independent and easy to use.

Banks do not need digital infrastructure like data centres or high-end servers and maintenance staff. “We want to provide low-cost solutions to the banks. The objective is to benefit people in the rural areas," adds Dash.

For any core banking project, the major cost heads are application development, data centre, disaster recovery site/information security, data capture, hardware and helpdesk. In CCBS, NIC takes care of all aspects, except hardware and manpower. As the access is role-based, there are many security layers to make sure data is kept safe. Role-based access is an approach by which system access is restricted to only authorized users. Users are charged as per requirement during the implementation phase.

NIC developed the system in 2004 for the Bihar state cooperative bank (SCB), which was looking for total branch automation. Other cooperative banks started showing interest in 2010.

As of now, the CCBS is implemented at more than 100 cooperative banking locations across Meghalaya and Chhattisgarh. The system operates at the levels of SCB, district cooperative bank (DCB), primary agriculture co-operative society (PACS) land development bank and primary agriculture development bank (PADB).

CCBS is operating at the Jila Sahakari Kendriya Bank, a district cooperative bank, in Chhattisgarh. In Meghalaya, 46 SCB branches have been brought under CCBS.

Pilot projects are under way at many more locations. Six thousand PACS in Rajasthan, 89 PADBs in Punjab, one Chandigarh SCB, three branches of Delhi Financial Corporation and 315 locations of Treasury Saving Banks in Kerala are using CCBS. The solution can be customized depending on local requirements. Meghalaya SCB still follows old Reserve Bank of India (RBI) clearing guidelines but wanted similar features in their version, says Dash.

The CCBS is used for saving and current accounts, term deposits, loan operations, cash receipts and disbursement, account management, standard book-keeping, inter-branch transfers, centralized monitoring and control. It also integrates National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS) and Automated Teller Machine (ATM) services, direct benefit transfers, common accounting systems as per Nabard (National Bank for Agriculture and Rural Development) standards and text message alerts for every transaction.

The journey from manual operations to automation has not been smooth for banks or NIC. Availability power, data connectivity and data migration were major challenges. “We are talking about bank branches which are working in rural areas with limited or no power supply and poor data connections, operated by staff whose average age is in late 40s or early 50s. They have never interacted with technology. Training, connectivity and data migration were the biggest challenges for us," says Dash.

On the other side, the banks had records dating back decades, mostly hand-written. NIC had to make sure that every detail of every account closed or operating was migrated to the servers. “Banks hired data operators, who were trained in using CCBS and all the data was migrated. Training is a very important aspect for a smooth rollout," says Dash.

During the implementation stage, training is given at three levels: nodal officers, PACS managers and direct users. There are various checkpoints to ensure the data entered is correct and complete, says Dash. “There are standard data fields which are compulsory to be filled for correctness and completeness of data. Data quality has to be 100% but in many cases, it is very poor which has to be addressed."

Generators had to be installed in many places which had little or no electricity supply. Since the software is web-based, Internet connection was essential. Most rural areas have connectivity issues; so, the NIC either requests for a leased line from the telecom operator or uses very small aperture terminal (VSAT) technology to connect to servers.

The real utility of CCBS lies in its capacity-building features, including easy integration with other online e-governance applications like paddy procurement (Dhan-Kharidi) in Chhattisgarh, local language support, real time PACS status reports and compliance reports.

“There are three levels in capacity building: people, process and technology. People and process is taken care of by the user and NIC handles the technology part," Dash says.

NIC is working on adding more features like Internet banking and asset liability management, and is also working to integrate new schemes like Jan Dhan Yojana.

Mint has a strategic partnership with Digital Empowerment Foundation, which hosts the Manthan Awards.

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