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ANDHRA PRAGATHI GRAMEENA BANK HEAD OFFICE: KADAPA

Circular No.125–BC-PDD-2010 Date: 27.05.2010 Financial Inclusion – Expanding the outreach of Banking Services in Rural Areas – Use of

Business Correspondents/Business Facilitators. The Reserve Bank of India, with an objective of ensuring greater financial inclusion and increasing the outreach of the banking sector, advised all Scheduled Commercial Banks including Regional Rural Banks, to use the services of NGOs, Self Help Groups, Micro

Finance Institutions (MFIs), Civil Society Organisations (CSOs), Individuals including owners of Kirana Shop/ Medical Shop/ Petrol Bunk, Agents of Small Savings Schemes of Government of India/Insurance Companies, Authorised functionaries of well run Self Help Groups (SHGs) linked to Banks, Retired Teachers etc., as intermediaries in providing financial and banking services through use of Business Facilitator (BF) and Business Correspondent (BC) models. The BCs are permitted to carry out transactions on behalf of the Bank as Agents. The BFs can refer clients, pursue the clients’ proposals and facilitate the Bank to carry out its transactions, but do not transact on behalf of the Bank. The BC model, given the right impetus, has the potential to speed up the process of financial inclusion in the Country and bring the vast majority of the population within the Banking fold. The full scope of the model can be realized not just by opening no-frill accounts but by providing the credit and financial education to all the needy persons.

The Reserve Bank of India also permitted the RRBs to collect reasonable service charges from the customer, in a transparent manner under a Board approved policy. In view of the vast scope, the Bank has to develop the business and to achieve greater penetration of Banking services, it has been decided to implement the BC model. The Bank prepared a policy for implementation of B.C. model based on the Smart Card Project implemented by Sponsor Bank and placed the same before the Board in its meeting held on 19.02.2010 and the Board has approved the same.

The broad policy guidelines are furnished hereunder for guidance of the branches.

POLICY GUIDELINES:

The Reserve Bank of India stipulated that the Banks should complete the process of providing Banking services in the villages with population above 2000 by March 2011.

1. The Banking services that are expected to be provided under Financial Inclusion Plan (FIP) are broadly as follows:

Savings Bank account An inbuilt Overdraft facility i.e. General Credit Card (GCC)/ Swarojgar Credit Card

(SCC) to some minimum level to all card holders Kisan Credit Card (KCC) facility to all Farmers progressively Recurring deposits Insurance products Remittance arrangement of small amounts Loans under self employment schemes

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2. The Business Correspondents permitted to be engaged by the Bank are as follows: NGOs/MFIs Societies registered under Mutually Aided Co-operative Societies Acts or the Co-

operative Societies Acts Section 25 companies Post Offices Retired Bank employees Retired Government employees Ex-servicemen Individual Kirana/Medical/Fair price shop owners Individuals who own Petrol pumps Individual Public Call Office (PCO) operators Agents of Small Savings Schemes of GOI/Insurance Companies Retired Teachers Authorised functionaries of well run Self Help Groups (SHGs) linked to Bank

The State Level Bankers’ Committee (SLBC) has furnished a list of villages allotted to the Banks as approved by their respective DCCs. The Bank has furnished such lists to the Regional Managers and after obtaining their opinion, finalised the number of villages, branch-wise and Region-wise and the consolidated list of villages, Region-wise is furnished hereunder. Sl.

No

Name of the

Region

No. of branches

covering the

villages

No. of villages

selected with below

3 K.M. distance

No. of villages

selected with

above 3 K.M.

distance

Total No.

of villages

1 Anantapur 69 12 169 181

2 Kadapa 59 8 117 125

3 Kurnool 54 7 143 150

4 Nellore 36 11 55 66

5 Ongole 22 6 26 32

Total 240 44 510 554

The branches, which are having villages with a distance of 3 KMs & below are advised to immediately initiate the steps and provide Banking services in a time bound manner as furnished hereunder:

Survey of the villages with a distance of 3 KMs & below is to be undertaken and number of unbanked people in each such village is to be ascertained before 30.06.2010.

Open Savings Bank account of all the unbanked people before 30.09.2010.

Provide General Credit Card or any other loan facility to all the unbanked people as suited to his/her requirement before 31.12.2010.

Facilitate them to transact the business with the Bank without any hassles as per the guidelines.

The villages, which are above 3 KMs shall be covered through Business Correspondent model. The modalities for engaging Technology Provider and the Business Correspondents are furnished in the circular. However, the Head office is in the process of floating RFP for Technology Provider and the same will take time to complete the process. Meanwhile, the branches may find out 3 or 4 suitable BCs as per the guidelines in each village, with a

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distance of above 3 KMs. selected to be covered under Financial Inclusion. As soon as the Technology Provider is finalised, the Head Office will start empanelling the BCs as per the guidelines. Each village should have one BC to provide the Banking services to the people.

3. POLICY ON BUSINESS CORRESPONDENT MODEL A) Business Correspondent Model - For Individual and Group of People: 3.1 Objective: To provide impetus to Banking Services for greater Financial Inclusion and bring with in the Banking ambit such of those sections of the society presently remaining excluded and to provide logistic support for increased penetration of agricultural credit and extend other services to the unreached people by the Bank. The scheme is based on broad policy guidelines of Reserve Bank of India to RRBs.

In terms of RBI guidelines to RRBs, the Business Correspondents can be utilized for rendering various banking services and schemes to the ultimate customers at the gross root level.

3.2 ELIGIBLE TECHNOLOGY PROVIDERS AND BUSINESS CORRESPONDENTS 3.2.1 The eligible technology providers are such entities engaged to provide the technology support for the specified project/s on mutually agreed terms and chosen by Head Office: IT Department and all relative aspects shall be finalized by IT Department in consultation with Planning and Development Department, Head Office.

3.2.2 The Business Correspondents are entities chosen to extend banking services in the

villages under the chosen specific projects by use of Smart Card Technology and Bio Metric Hand Held Machines or any other mode decided by the Bank from time to time. The list of eligible Business Correspondents is furnished under point No. 2.

3.3 IDENTIFYING THE BUSINESS CORRESPONDENT – SELECTION PROCEDURE

3.3.1 NGOs/ MFIs: 3.3.2 Minimum 3 years operation in the command area of the branches and engaged in

capacity building / upliftment of general public through micro finance or other means.

3.3.3 The NGOs/ MFIs shall be non-political, non–religious and of high repute, working without any caste, creed bias.

3.3.4 The authorized office bearers should represent the NGOs/ MFIs in respect of the agreement entered with the Bank and in all formal communication arising out of the scheme. They shall be without any criminal record and of good repute in the area. If the NGOs/ MFIs appoint their agents as Business Correspondent, they should satisfy point No. 3.4.

3.3.5 The rating of the NGOs is to be done as per the rating chart given in Annexure-VI. The branches shall ensure that, while appointing the above entities as BCs, the fundamental principle that the Individuals are the residents of the area in which they propose to operate as BCs stands fulfilled.

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3.4 ELIGIBILITY OF INDIVIDUALS, MFIs, WHO WORKS AS BUSINESS CORRESPONDENTS

Individuals between the age Group of 18 to 6o Years (Except for retired employees) including owners of Kirana Shop/ Medical Shop/ Petrol Bunk, Agents of Small Savings Schemes of Government of India/Insurance Companies, Authorised functionaries of well run Self Help Groups (SHGs) linked to Banks, Retired Teachers etc.

Place of residence – a native and a local resident of the place / area.

Educational qualification – at least SSC pass, preferably unemployed Graduates.

Minimum standing/experience of 5 years in the field

No cases of fraud / criminal acts are registered against the Business correspondent proposed.

Satisfactory confidential opinion/market report based on discreet enquiry by the Branch.

Should be physically fit to move around the villages envisaged to be covered. 3.5 POST OFFICES

Post Office being Central Government Department has got offices in all the nook and corner of the country, who can act as a Business Correspondent. 3.6 Branches shall identify an entity / Persons, who will act a Business Correspondent as per the norms specified above, by obtaining the necessary application as per ANNEXURE I

(NGOs / MFIs) and the letter of authority to be obtained in case of NGOs/ SHGs / Individuals as per Annexure II.

3.7 Suitable entities under Business Correspondents shall be identified by the Branch and recommended to HO (through RO) for empanelment. In case NGO/MFI is appointed as Business Correspondent, it is the responsibility of NGO/MFI to appoint Customer Service Provider (CSP) in consultation with the Bank.

3.8 Keeping in view the operational risks and other implied risks, the branches are advised to ensure that they carry out suitable due diligence/care in respect of the Individuals/entities proposed to be appointed as Business Correspondents and also take all the safeguards in the process of operations to minimize the agency risks. The Head Office: Planning and Development Department shall screen the proposals and conduct interview for selection of Business Correspondents by forming a Committee with two Senior Managers as members and the General Manager as Chairman of the Committee.

4. ROLES AND RESPONSIBILITIES i. TECHNOLOGY PROVIDER

a. Capturing of fingerprints, photo, card generation / embossing. b. Supply of infrastructure like RFID Scanner, Mobile Handset, Hand Held Machine, Battery

etc., at the cost approved by the Bank. c. Imparting necessary training to Business correspondent and branch officials. d. Providing transaction data to Bank in the format specified by the Bank for maintaining

customer / BC account. e. To provide backup services and also attend to the technology related problems.

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The Branch shall provide necessary data (name, account number, address, date of birth etc.) to technology provider for generating / issuing smart cards to the customers. The technology provider shall generate the smart cards and after ensuring correctness, these cards are to be sent to the branch for distribution after encoding / embossing name and card number in the magnetic stripe/ on card for enabling ATM transaction only where the magnetic stripes are provided in the cards. The Branch to ensure the correctness of the data embossed on the card. Wherever smart cum debit cards are issued (where Bio metric ATMs are installed), Branch to link the card to the branch database before issuing the card to the customers.

ii. BUSINESS CORRESPONDENT a. Identification of the customers in co-ordination with the Branch. b. Obtaining of account opening form, documents as per KYC norms, submission of

documents to the branch for processing. c. Accepting cash receipts by the card holders/ permitting withdrawals to cardholders. d. Beginning of Day (BOD) activity and downloading the ATM transaction to the handheld

machine. e. End of day activity (EOD) and uploading the transactions to the server. f. Cash holding, maintenance of cash within the limit fixed. g. Ensuring confidentiality of the transactions and safety of the Backups. h. BC can also be assigned the works of BF model like Popularization of Banking products

(Deposits, Advances, Other Products) and recovery etc., also on commission basis as decided by Head Office from time to time.

iii. IDENTIFICATION OF PERSONS, WHO ARE OPENING THE

ACCOUNTS

The Business Correspondent to identify the persons in the villages for opening the accounts. The customers under “No Frill” category may also be brought under the scheme.

iv. OBTENTION OF THE DOCUMENTS UNDER KYC NORMS The Business Correspondent shall obtain the documents as per KYC norms.

v. OBTAINING OF THE ACCOUNT OPENING FORM ALONG WITH THE PHOTOS;

The Business Correspondent shall obtain the account opening form and the photo of the persons identified for the opening of accounts. Branch shall approve the same and permit the BCs to open the accounts in their system subject to KYC Norms. (Decision of the Branch is final)

vi. TRANSACTION BY THE SMART CARD HOLDERS Smart Card Holders can operate their accounts by using the smart card having biometric identifications through the BC and withdraw / remit cash by / to their account with the branch.

vii. RECEIPTS / WITHDRAWALS The Business Correspondent has to accept the cash remitted by the Card Holders and make the payment of the cash withdrawn by the account holders, by putting through necessary transactions in the hand held device and the printouts of the transactions are to be handed over to the account holders.

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viii. TRAINING OF THE BUSINESS CORRESPONDENT

The Business Correspondent is to be trained by the Technology provider to operate the machine, printing the transactions, accounting entries, day beginning, Day end transactions, and Uploading the data to the central server. 5. OPERATIONAL MODALITIES

A. OPENING OF THE ACCOUNT OF THE BUSINESS CORRESPONDENT Branch shall open saving Bank account of the Business Correspondent in the system. Initially the Business Correspondent has to bring in Rs.5000/- or the minimum amount prescribed by Head Office, to be credited to this account. If CSPs are engaged by NGOs / MFIs, each CSP has to open an account and credit the amount.

B. ATM TRANSACTION BY SMART CARD HOLDERS : The Smart Card provided by the service providers is embedded with Magnetic Stripes and enables to draw cash through Bio Metric ATM also. However, this can be extended after streamlining the operation.

C. HANDING OVER THE INSTRUMENTS TO THE BUSINESS

CORRESPONDENT After obtaining the agreement duly signed by the Business Correspondent, the Branch has to hand over the instruments (Hand Held device, and mobile phone/ printer) to the Business correspondent / CSP authorized by BC, against acknowledgement. Any malfunctioning of the device shall be brought to the notice of the technology provider by the branch for rectification / repair, if any.

D. Providing Single Lock cash box The Business Correspondent will be provided with a Single Lock Cash Box for safe keeping the cash balance remitted by the Smart Card Holders.

E. BEGINNING OF THE DAY (BOD) ACTIVITIES: At the time of BOD activity, the BC shall ensure download of ATM / any other transactions from the branch server/ central server to handheld device.

F. COMPLETING THE DAY END TRANSACTION After the day’s transactions, the BC has to perform the Day end transaction and upload the data to the bank server using the mobile phone provided to him at 3 PM every day on all the week days and at 1 PM on Saturdays. He / she shall not put through any transactions from 3 Pm to 5 PM and 1 Pm to 2 Pm on weekdays and Saturdays respectively. The printouts of the day-to-day transactions are to be preserved by the BC, which will serve as his record for having completed the transactions. Branch shall ensure upload of all transaction details (including ATM Transactions) pertaining to the accounts covered under this scheme, daily in the morning to the handheld device of BC. Similarly, branch should ensure, download of all transactions done by BC during the day, before day end.

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G. ACCOUNTING PROCEDURE :

i. Cash Remittance by the Cardholder through BC: Debit : Pooling Account of the BC with the Branch (Sundry Assets). Credit : Customer’s account with the branch. ii. Cash withdrawn by the Card holder through BC: Debit : Customer’s account with the branch. Credit : Pooling Account of the BC with the Branch (Sundry Assets). The total of all the accounts will tally with the Balance in BC’s pool account. (No Slips will be prepared by the Branch) iii. When BC remits cash in excess of his / her per day limits Debit : Cash Account Credit : BCs account (Necessary slips are to be passed by the branches) iv. When BC withdraws Cash from Branch Debit : BCs account Credit : Cash Account (Necessary slips are to be passed by the branches)

H. CASH HOLDING: The Business Correspondent can hold cash not more than Rs.25, 000/-(Rupees Twenty five thousand only) at a time. Head Office may review, and enhance the cash holding limit up to Rs. 50000/- or more depending on the requirement, selectively. The Maximum limit of single transaction shall be restricted to Rs.3000/- per day per customer. The BC has to remit back the excess cash holding to the BC’s pooling account with the branch. The BC can withdraw the amount from this pooling account for payment, whenever required and the amount of such withdrawal is restricted to Rs.25, 000/- (Rupees Twenty five thousand only) at a time. The Officials of the branch have to check the cash holding with the Business Correspondent along with the day’s debits and credits once in a month and certify the same in the report submitted to Accounts Division: RO/HO. All the above ceiling limits are subject to review from time to time. 6. OBTENTION OF THE AGREEMENT FROM THE BUSINESS CORRESPONDENT

Branch has to obtain the agreement as per Annexure V from the Business Correspondent on the stamp paper of requisite value, which has been approved, by Head Office. 7. OBTENTION OF THE SECURITY DEPOSIT

Branch shall obtain the Security Deposit of Rs.25,000/- or the amount prescribed by Head Office from the Business Correspondent and the amount shall be kept under Pragathi Cash Certificate for 3 years. The PCC should be got discharged by the Business Correspondent and obtained as security and kept along with the agreement, which should be preserved at the branch in double lock.

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8. CHARGES PAYABLE TO BUSINESS CORRESPONDENT Charges shall be 0.25 % of the value of the transaction subject to a maximum of Rs.10/- per transaction with a minimum of Rs.1500/- per month and a maximum of Rs.2500/-per month, per business correspondent. The charges shall be arrived at and paid monthly by the branch as per the specification and a report there of may be sent to HO/RO. No transaction fee shall be collected by the Business correspondent directly from the customers. The charges are subject to review from time to time. 9. REPORTS / REGISTERS Business Correspondent has to submit one copy of the day end transactions to the branch, on daily basis regularly, for verification and checking. Branches shall submit the monthly statement to RO/HO as per the format annexed. a) Branch has to maintain a register of particulars of transaction and the fee paid to

Business correspondent as per ANNEXURE III. b) Monthly progress report / details of fees paid to Business correspondents as per

ANNEXURE IV.

10. BALANCING OF ACCOUNTS

Branches shall ensure tallying of accounts along with other SB Accounts, every month as per the system prevailing. No separate balancing is envisaged. 11. GRIEVANCE/ DISPUTE REDRESSALS

Any difference of opinion in payment of fees / dispute relating to the transactions made through the Business Correspondent (Service Provider) and between the Business Correspondents and Branches, has to be referred to RO for resolving the same. Any dispute between the Customer and BC should be resolved by branch in consultation with the Regional Office. The Regional Manager of each Region shall be the Grievance Redressal Officer in respect of the above. The details of the Grievance Redressal Officer shall be displayed at the premises of the BC as also at the base branch. 12. OTHER TERMS / CONDITIONS

The overseeing Executive from RO shall verify the functioning of Business Correspondents (service providers) during the branch visits.

Evaluation of the services and efficacy will be done after six months/ year, for a suitable decision for continuation / termination / expanding the areas of contracted services.

The full details of Business Correspondent with photo and the specific role of the business correspondent shall be displayed on the notice board in the Banking Hall.

The Business Correspondent has to be provided with an Identity Card / Letter by the branch.

A letter of secrecy to be obtained from the Business correspondent.

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The branches should ensure that interaction with the Business Correspondent is restricted to specified assignments. No general discussion on the parties and information on the value of accounts, their dealings with the Bank etc to be disclosed.

In case of any act of omission / commission on the part of the Business Correspondent comes to the knowledge of the branch, it shall be brought to the notice of HO/RO, who shall suitably examine the matter. In case any act of omission/commission by the Business Correspondent, puts bank’s position in jeopardy in any way, the HO/RO should arrange to terminate the services forthwith. The details of such delisted Business Correspondents shall also be displayed on the notice Board of the Branch/es which is/are engaging such Correspondents and shall also be published in a widely circulated local news paper, in local language or to be made public by Tom Tom. The branches shall also provide the names of such persons to Lead District Manager (LDM) of the District to enable him/her to circulate the same to other Banks.

The cost involved in delisting (like News Paper Advertisements) shall be recovered from the Business Correspondents.

An Executive nominated by the Head Office has to look into all the aspects relating to grievances of the customers of the Bank with regard to services outsourced through the agencies engaged. Publicity will be made to inform the customers/ Public on the Business Correspondents and information on Grievance Redressal Mechanism shall be displayed in the Branch. ROs should take serious note of the representations / complaints of public and act accordingly.

The complaints should be redressed within a time frame of 30 days.

The Business Correspondents shall also abide by the decisions of the Grievances Redressal Machinery that will put in place for redressing the complaints about the services rendered.

B) BC MODEL FOR COMPANIES: 13.1 ELIGIBLE TECHNOLOGY PROVIDERS AND BUSINESS CORRESPONDENTS As per point No. 3.2.1 to 3.2.2 13.2 IDENTIFYING THE BUSINESS CORRESPONDENT – SELECTION PROCEDURE As per point No. 3.3.1 to 3.3.5 13.3 ELIGIBILITY OF INDIVIDUALS REPRESENTING NGO/ MFI WHO WORKS AS BC

As per point No. 3.4 13.4 POST OFFICES Post Office being Central Government Department has got offices in all the nook and corner of the country, who can act as Business Correspondents.

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13.5 The Branch shall identify an entity, who will act as Business Correspondent as per the norms specified above, by obtaining the necessary application as per Annexure I

(NGOs / MFIs) and the letter of authority to be obtained in case of NGOs/ SHGs as per Annexure II. 13.6 Suitable entities under Business Correspondents shall be identified by the Branch and recommended to HO (through RO wherever applicable) for empanelment. The work of Business Correspondents, referred as Service Providers can be entrusted to only persons, who are empanelled by RO/HO. In case NGO/MFI is appointed as Business Correspondent, it is the responsibility of NGO/MFI to appoint Customer Service Provider (CSP) in consultation with the Bank. The Head Office: Planning and Development Department shall screen the proposals and conduct interview for selection of Business Correspondents by forming a Committee with two Senior Managers as members and the General Manager as Chairman of the Committee. 14.1 ROLE AND RESPONSIBILITIES i. TECHNOLOGY PROVIDER a. Capturing of fingerprints, photo, card generation / embossing. b. Supply of infrastructure like RFID Scanner, Mobile Handset, Hand-held device/ Printer

Battery etc., at the cost approved by the Bank. c. Imparting necessary training to Business correspondent and branch officials. d. Providing transaction data to Bank in the format specified by the Bank for maintaining

customer / BC account. e. To provide backup services and also attend to the technology related problems. Branch shall provide necessary data (name, account number, address, date of birth etc.) to technology provider for generating / issuing smart cards to the customers. The technology provider shall generate the smart cards and after ensuring correctness these cards are to be sent to the branch for distribution / or forwarded to Head Office for encoding / embossing name and card number in the magnetic stripe/ on card for enabling ATM transaction only where the magnetic stripes are provided in the cards. Branch to ensure the correctness of the data embossed on the card. Wherever smart cum debit cards are issued (where Bio metric ATMs are installed), Branch to link the card to the branch data base before issuing to the customers.

ii. BUSINESS CORRESPONDENT a. Identification of the customers in co-ordination with the Branch. b. Obtaining of account opening form, documents as per KYC norms, submission of

documents to the branch for processing. c. Accepting cash receipts by the card holders/ permitting withdrawals to card holders. d. Beginning of Day (BOD) activity and downloading the ATM transaction to the

handheld machine. e. End of day activity (EOD) and uploading the transactions to the server. f. Cash holding, maintenance of cash within the limit fixed. g. Ensuring confidentiality of the transactions and safety of the Backups.

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h. BC can also be assigned the works of BF model like Popularization of Banking products (Deposits, Advances, Other Products) and recovery etc. also on commission basis as decided by Head Office from time to time.

i. Other role and responsibilities are enclosed else where. 14.1 IDENTIFICATION OF PERSONS, WHO ARE OPENING THE ACCOUNT The Business Correspondent to identify the persons in the villages for opening of accounts. Existing customers under “No Frill” category may also be brought under the scheme. 14.2 OBTENTION OF THE DOCUMENTS UNDER KYC NORMS The Business Correspondent shall obtain the documents as per KYC norms. 14.3 OBTAINING THE ACCOUNT OPENING FORM ALONG WITH THE PHOTOS; The Business Correspondent shall obtain the account opening form and the photo of the persons identified for the opening of accounts. Branch shall approve the same and open the accounts in their system subject to KYC Norms. 14.4 TRANSACTION BY THE SMART CARD HOLDERS Smart Card Holders can operate their accounts by using the smart card having biometric identifications through the BC and withdraw / remit cash by / to their account with the branch. 14.5 RECEIPTS /WITHDRAWALS The Business Correspondent has to accept the cash remitted by the Card Holders and make the payment of the cash withdrawn by the account holders, by putting through necessary transactions in the hand held device and the printouts of the transactions are to be handed over to the account holders. 14.6 TRAINING OF THE BUSINESS CORRESPONDENT

The Business Correspondent is to be trained by the Technology provider to operate the machine, printing the transactions, accounting entries, day beginning, day end transactions, and Uploading the data to the central server. 15 OPERATIONAL MODALITIES 15.1 ATM TRANSACTION BY SMART CARD HOLDERS: The Smart Cards provided by

the “Technology Provider” is provided with Magnetic Stripes and is enabled to draw cash through Bio Metric ATM also. However, this can be extended after streamlining the operation.

15.2 HANDING OVER THE INSTRUMENTS TO THE BUSINESS CORRESPONDENT After obtaining the agreement duly signed by the Business Correspondent, the Branch has to hand over the instruments (Hand device, and mobile phone/ printer) to the Business correspondent / CSP authorized by BC, against acknowledgement. Any malfunctioning of the devices shall be brought to the notice of the Technology Provider by the branch for the rectification / repair, if any.

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15.3 Providing Single Lock cash box The Business Correspondent will be provided with a Single Lock Cash Box for safe keeping of the cash balance remitted by the Smart Card Holders. 15.4 BEGINNING OF THE DAY (BOD) ACTIVITIES: At the time of BOD activity, BC shall ensure download of ATM / any other transactions from the branch server/ central server to handheld device. 15.5 COMPLETING THE DAY END TRANSACTION After the day’s transactions, the BC has to perform the Day end transaction and upload the data to the Bank server, using the Mobile phone provided to him, at 4 PM every day on the working days and at 1 PM on Saturdays. He / she shall not put through any transactions from 4 Pm to 5 PM and 1 Pm to 2 Pm on week days and Saturdays respectively. The printouts of the day-to-day transactions are to be preserved by the BC, which will serve as his/her records for having completed the transactions.

Branch shall ensure uploading all transaction details (including ATM Transactions) pertaining to the accounts covered under this schemes, daily in the morning to the handheld device of BC. Similarly, branch should ensure, download of all transactions done by BC during the day, before day end.

15.6 CASH HOLDING: The Business Correspondent can hold cash not more than Rs.25,000/- (Rupees Twenty five thousand only) at a time. The HO/RO may review, and enhance the cash holding limit up to 50,000/- depending on the requirement, selectively. The maximum limit of single transaction shall be restricted to Rs. 3000/- per day per customer. BC has to remit back the excess cash holding to the BC’s pooling account with the branch. The BC can withdraw the amount from this pooling account for payment, whenever required and the amount of such withdrawal is restricted to Rs.25,000/- (Rupees Five thousand only) at a time. The Officials of the branch have to check the cash holding with the Business Correspondent along with the day’s debits and credits once in a month and certify the same in the report submitted to Accounts Division of respective Regional Office.

16 OBTENTION OF THE AGREEMENT FROM THE BUSINESS CORRESPONDENT Branch has to obtain the agreement as per Annexure V from the Business Correspondent on the stamp paper of requisite value, which has been approved, by legal section, Head Office.

17 OBTENTION OF THE SECURITY DEPOSIT

Branch shall obtained the Security Deposit of Rs.25,000/- from the Business Correspondent and the amount shall be kept under Pragathi Cash Certificate for 3 years. The PCC should be got discharged by the Business Correspondent and obtained as security and kept along with the agreement, which should be preserved at the branch in double lock.

18 CHARGES PAYABLE TO BUSINESS CORRESPONDENT Charges shall be 0.25 % of the value of the transaction subject to maximum of Rs.10/- per transaction with a minimum of Rs.1500/- per month and a maximum of Rs.2500/-per month, per Business Correspondent. The charges shall be arrived at and paid monthly by the branch as per specification and report may be sent to Accounts Section of respective Regional Office. No transaction fee shall be collected by the Business Correspondent directly from the customers.

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OR Transactions on HHM: ( Based on average transactions per day ) Up to 25 average transactions per day : Rs. 1500/- lump sum per month. 25 to 50 average transactions per day : Rs. 2000/- lump sum per month. 50 to 100 average transactions per day : Rs. 2250/- lump sum per month. More than 100 average transactions per day : Rs. 2500/- lump sum per month. Loans & Advances : For approved loans : 0.25% of loan amount Loan disbursement : 0.25% of the disbursed amount For rejected loan applications (Rejection on technical grounds) : Rs.10 per application Recovery of loans: Live accounts : 0.25% of the recovery amount Written off accounts : 5% of the recovery amount Deposit accounts :

Canvassing and Opening of account (SB/RD etc.) : Rs.5/- per account Canvassing and opening of Term Deposits / : 0.25% of the deposit amount Special Term Deposits Arranging cash deposit at branch : 0.25% of the transaction amount Arranging withdrawal at branch : 0.25% of the transaction amount Arranging remittances through branches : 0.10% of the transaction amount However, the selection committee, as described under para 3.7 of the Note, is empowered to approve the enhanced remuneration with the permission of the Chairman as per the market situation. Compared to cost of these transactions, if conducted at branch level, the above remuneration should be considerably lower. Alternatively, a reasonable lump sum monthly payment for BCs may be paid for attending to all the activities as decided by Head Office from time to time as per the guidelines. 19 REPORTS / REGISTERS Business Correspondent has to submit one copy of the day end transactions to the branch, on daily basis regularly, for verification and checking. Branches shall submit the monthly statement to Regional Office as per the format annexed. Branch has to maintain a register of particulars of transaction and the fee paid to Business correspondent as per ANNEXURE III. Monthly progress report / details of fees paid to Business correspondents as per ANNEXURE IV.

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20 BALANCING OF ACCOUNTS

Branches shall ensure tallying of accounts along with other SB Accounts, every month as per the system prevailing. No separate balancing is envisaged. 21 GRIEVANCE/ DISPUTE REDRESSALS

Any difference of opinion in payment of fees / dispute relating to the transactions, made through the business correspondent (Service Provider) and between the Business Correspondents and Branches, to be referred to the RO for resolving the same. Any dispute between the Customer and BC should be resolved by branch in consultation with the Regional Office. The Regional Manager of each Region shall be the Grievance Redressal Officer in respect of the above. The details of the Grievance Redressal Officer shall be displayed at the premises of the BC as also at the base branch. 22 OTHER TERMS / CONDITIONS

The overseeing Executive shall verify the functioning of Business Correspondents (service providers) during the branch visits.

Evaluation of the services and efficacy will be done after six months/ year, for a suitable decision for continuation / termination / expanding the areas of contracted services.

The full details of Business Correspondent with photo and the specific role of the Business Correspondent shall be displayed on the notice board in the Banking Hall.

The Business Correspondent to be given with Identity Card / Letter by the branch.

A letter of secrecy to be obtained from the Business Correspondent.

The branches should ensure that interaction with the Business Correspondent is restricted to specified assignments. No general discussion on the parties and information on the value of accounts, their dealings with the Bank etc., to be disclosed.

In case of any act of omission / commission on the part of the Business Correspondent comes to the knowledge of the branch, it shall be brought to the notice of the Regional Office, who shall suitably examine the matter. In case any act of omission/commission by the Business Correspondent, puts bank’s position in jeopardy in any way, the RO should arrange to terminate the services forthwith. The details of such delisted Business Correspondents shall also be displayed on the notice Board of the Branch/es which is/are engaging such Correspondents and shall also be published in a widely circulated local news paper, in local language or to be made public by Tom Tom.

The cost involved in delisting (like News Paper Advertisements) shall be recovered from the Business Correspondents.

An Executive nominated by the Head Office to look into all the aspects relating to grievances of the customers of the Bank with regard to the services outsourced through the agencies engaged. Publicity will be made to inform the customers/ Public on the Business correspondents and information on Grievance Redressal Mechanism shall be displayed in the Branch. The Regional Offices should take serious note of the representations / complaints of public and act accordingly.

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The complaints should be redressed within a time frame of 30 days.

The Business Correspondents shall also abide by the decisions of the Grievances Redressal Machinery that will put in place for redressing the complaints about the services rendered.

The branches/Offices shall carefully go through the guidelines and understand the spirit of the Government of India and the Reserve Bank of India in implementing the above and make best efforts to include the hither to excluded people to the Banking fold. The whole process is meant to be completed in a time bound manner and this cannot be delayed by any chance. Hence, all the branches/offices are once again advised to exercise every care while recommending the names of BCs and implement the guidelines in true spirit. Clarifications required, if any, on this circular may be sought from Head Office: Planning & Development Department through Regional Office as per extant guidelines. (K. PREETAM LAL) CHAIRMAN

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ANNEXURE – I APPLICATION FOR EMPANELLING AS BUSINESS CORRESPONDENTS

(NGOS/MFIS) From: (Name of the NGO/ Address) To: Andhra Pragathi Grameena Bank ___________ Branch

Sub: Engagement as Business Correspondents.

Hereunder, we submit the proposal for my engagement of the NGO as Business Correspondent for extending Banking Services under the Bank’s Scheme on Outsourcing under Business Facilitator Model.

SL. NO.

PARTICULARS

1 Name of the NGO/MFI/ Individual

2 Address of NGO/MFI/ Individual

3 Registration Particulars

4 a) Name b) Father’s / Mother’s name age & address of the authorized signatories

5 Details of the organizational setup

6 Details of present project/s undertaken by NGO/MFI

7 Present Banker

8 Whether financial statement for the last three years enclosed

9 Details of savings and loan accounts of the NGO/MFI/ Applicant

Bank :

Branch :

SB A/c. No. :

Loan A/c. No. :

Nature Limit Liability Arrears (if any)

10 Services/activities proposed and organizational structure for supporting the project proposed

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11 a)Name b)Father’s / Mother’s name Age & Address of the representatives of the NGO/MFI who shall act as Business correspondent Phone/Mobile number

12 Educational qualification of the representatives of who shall act at Business correspondent Reading / Writing ability in- English Telugu

13. Whether the resolution passed by the governing body of NGO/MFI for applying for empanelment is enclosed

14. Area / Villages proposed to be covered.

15. Activities / services proposed to be extended.

Undertaking: We understand that my offer under this application will be for acting as a Business Correspondent for the limited purposes of such services, as decided by the Bank and if the Bank engages my services, it will not be an offer by the Bank for any employment in the Bank now or at any time in the future. The contractual arrangements are as mentioned in the Outsourcing Agreement signed both by me/us and the Bank and continuance of my/our services shall be subject to periodic review by the Bank. Place: Date: Signature/s of the authorized signatories of NGO/MFI

Recommendation of the Branch in-charge.

1. Verified the Original documents for which copies have been submitted. 2. Recommendations with reasons as per the table.

Nature of Service/ s to be outsourced Remarks (for each activity)

Place: Date:

MANAGER / SENIOR MANAGER

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ANNEXUE – II

LETTER OF AUTHORITY OF ENGAGEMENT AS BUSINESS CORRESPONDENTS From: (Name of the NGO /MFI To: & Address) Andhra Pragathi Grameena Bank __________ Branch Sub: Engagement as Business Correspondents - Letter of authority. With further reference to our application dated……………. For engagement as Business Correspondents and the Outsourcing Agreement dated………….. entered with Andhra

Pragathi Grameena Bank, we state the following: The following representatives/ employees are authorized for carrying out the performance related as per the agreement referred above. We are enclosing herewith a copy of the resolution, authorizing the following person to be engaged as Business Correspondent. 1. Mr/Ms. …………………… S/o./ D/o, W/o, …………………………….. aged ………. and resident of (address) …………………………………………………………………………….. Whose signature and photograph is hereunder attested:

Signature Attested Photograph with Attestation across

2. Mr/Ms. ………………………. S/o./ D/o, W/o, …………………………… aged ……… and resident of (address) …………………………………………………………………………. Whose signature and photograph is hereunder attested:

Signature Attested Photograph with Attestation across

The undersigned business correspondents shall be responsible for all acts of the personnel authorized as above. The Business correspondents undertakes to remove summarily such authorized personnel from the position of acting on behalf of the business, if for correspondents any reason not required to be disclosed by the Bank to the Business correspondents, the bank seeks discontinuation of availing the services of such authorized representatives of the Business correspondents. The authorized representatives will be instructed to wear the ID Card to all times when performing the functions of Business correspondents. Place:

Date Authorised Signatory / ies NGO/MFI (Business correspondent)

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ANNEXURE III PARTICULARS TO BE MAINTAINED AT THE BRANCH

(To be maintained month wise)

Sl. No.

Name of Business correspondent

No. of Tran.

Value of Transactions

Amount paid

Date of payment

Cr Dr Cr Dr

Manager / Senior Manager

ANNEXURE IV

MONTHLY PROGRESS REPORT /APPROVAL OF FEE TO BE PAID TO BUSINESS CORRESPONDENT

From: To: Head Office _____________

For the month of __________________

Sl. No.

Name of Business Correspondent

Number of Transactions

Value of Transactions

Amt Payable

CR DR Cr DR

CERTIFICATE: a) The above services have been undertaken / entrusted as per the scheme guidelines. b) The random checking of the cash holding with the Business Correspondent and the cash

transactions have been checked by Sri…………………….. on ………………… . Place: Date: Signature of Branch Manager

Date of Review Amount recommended by the Branch Rs.

Review at RO/HO Amount payable to business facilitators Rs.

Manager / Senior Manager

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ANNEXURE V

PROFORMA OF MEMORANDUM OF AGREEMENT BETWEEN BANK BRANCH AND BUSINESS CORRESPONDENT

MEMORANDUM OF AGREEMENT

The Memorandum of Agreement (MOA) made at………..(place) this …… day of ………. 2010 BETWEEN The Andhra Pragathi Grameena Bank, a bank constituted under RRB act of 1976 with its Head Office at Kadapa in Kadapa District of Andhra Pradesh State, having branches, inter alia, one at …………..represented by Branch Manager, hereinafter referred to as “The Bank”

which term shall unless repugnant to the context, meaning and include its successors, assignees, lawful attorneys, authorized representatives etc, of the first part

AND Sri /Smt ……. ….. S/D/ W/o ………..aged……..years, residing at ………village, …………..Mandal……..district of the second part. WHEREAS Andhra Pragathi Grameena Bank is interested in providing savings and other financial products to the customers of …………. Branch located at …….. , in order to meet their financial requirements. WHEREAS aforesaid Sri./Smt………………. has represented to the Bank that he/she is willing to work as BUSINESS CORRESPONDENT ( hereinafter referred to as BC) (which expression shall unless repugnant to the context or meaning thereof shall include its successors and permitted assigns), at ………village/s of …… district. AND WHEREAS the BC has further represented to Andhra Pragathi Grameena Bank that BC has the requisite skill, expertise, infrastructure and capability to assist the branch in providing savings and other financial products to the customers of the branch and to carry out various other functions as mutually agreed to between the parties. The parties have decided to reduce the terms and conditions agreed upon into writing through these presents. NOW THIS AGREEMENT WITNESETH AS FOLLOWS: 1. The BC shall discharge important duties, obligations and functions as furnished below: The BC is provided with a Hand Held Machine (HHM) /Smart Card/RFID Card Reader and Cash Box. The BC is permitted to accept cash and also make payment up to Rs. 3,000/- per customer to begin with on behalf of the branch, after duly complying with the prescription set out for operation of smart card based transactions through the Hand Held Machine ( HHM) /Smart card/RFID Reader.

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The cash holding by the BC at any time shall not exceed Rs. 25,000/-. In the event it exceeds Rs. 25,000/- the BC shall immediately remit the amount at the branch or as per the schedule mutually agreed. For the purpose of making payment to the customers, initially an amount of Rs. 25,000/- would be made available to the BC by the branch as sundry advance. The BC shall ensure that all the transactions made by the customers are accounted for and reflected in the books of the branch by the end of the day or early hours of the next working day, using the available connectivity. In the event of any difficulty in securing the connectivity, the BC shall personally visit the branch for completion of transactions. For the services to be rendered by the BC, a consolidated compensation of Rs……….. per mensem will be paid towards conveyance expenses and further Rs………. per mensem as honorarium for the services provided for the present. However the Bank may pay additional honorarium for selling the Bank’s products, recovery of loans, asset verification, procurement of land records etc., as per separate mutual agreement. The BC shall take proper care of and also ensure safe custody of the HHM/Smart Card/RFID Card Reader and the cash box. The BC shall arrange to display a board in his/her work place/shop to indicate to the customers that he/she is an authorized BC of the branch. The display board should, inter alia, furnish the contact phone numbers and address of the branch and also the Grievance Redressal Officer, as per the design provided by bank. The BC shall not have any kind of association/involvement/connection whatsoever with any political party/ies or with any organization/entity which has been banned by any law for the time being in force. The BC shall not have any criminal record, as verified by the police authorities. The BC or any person/employee of the BC is specifically prohibited from charging / accepting any fee from the customers for the services rendered by them on behalf of the Bank. The Bank and the software/ hardware vendor will provide necessary training in the usage of hardware, software etc. The Bank will also impart general training on business rules, systems and procedures and other relevant topics for carrying on the work by the BC. 2. The parties agree that depending upon the volume of transaction, the cash holding limit, the transaction limit per customer, compensation payable to the BC and any other matter will be settled between the BC and the Bank by mutual consent. 3 The BC shall act prudently in accordance with the terms of this agreement during the validity of the agreement and shall exercise all due diligence and vigilance in carrying out its duties and obligations under this agreement. The BC further agrees that it shall abide by all the policy guidelines, norms, rules, regulations, code of ethics, etc., framed by the Bank and/or the Reserve Bank of India and/or the Government, from time to time. 4. In case of bodily injury, if any, to the BC in the course of performance under this agreement, the Bank shall not be liable or bound to pay any monetary compensation or otherwise be responsible in any way, whatsoever;

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5. It is agreed to between the parties that the BC should exclusively work for the bank. Once engaged for a particular Branch/Branches of the Bank, the Business Correspondent shall be precluded from working in any form on behalf of any other bank, in similar type of activity, till he/she/it ceases to be the BC. 6. This agreement shall be effective from the date of its execution and shall continue to be in full force and effect until and unless it is terminated by either of the parties. 7. It is agreed to between the parties to this agreement that the Bank shall have right to terminate this agreement forthwith and without assigning any reason. 8. The Bank may terminate this agreement forthwith and without giving any notice to the BC upon the occurrence of any of the following events of default under this Agreement.

a. Any failure on the part of the BC to observe or perform any covenant or obligation or undertaking under this agreement.

b. Any of the representations or warranties made by the BC in this agreement or other

related deeds and documents are found to be false or incorrect in any respect, which the Bank may deem, material.

c. Extraordinary circumstances, which, in the opinion of the Bank, make it improbable for

the BC to fulfill his/her obligations under this agreement and other related deeds and documents.

9. Upon the termination or expiration of this agreement for any reason whatsoever, the BC shall:

a. Immediately cease to use in any manner whatsoever the name of Andhra Pragathi Grameena Bank and its corporate logo in any correspondence/communications.

b. Return to the Bank or dispose of or destroy as the Bank may direct all information/documents/literature/gadgets such as smart card/RFID card reader/HHM//cash box etc., provided to him/her pursuant to this agreement.

10. The BC shall not disclose to any third party regarding information or knowledge concerning the business of the Bank and its customers. The BC shall take such steps as at his/her own expenses as the Bank may direct in order to enforce or restrain any breach of the terms of this clause. 11. The BC shall not use any illegal, unlawful or forceful means in performing his/her obligations under this agreement. 12. Any provision of this agreement may be amended or waived if, and only if such amendment or waiver is in writing and signed, in the case of an amendment by both the parties, or in the case of a waiver, by the party against whom the waiver is to be effective. 13. This agreement may not be assigned by either party without the prior written consent of the other party, provided that the Bank shall be entitled to assign the rights and obligations hereunder to any of its affiliates.

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14. It is understood and agreed by the BC that the scope of periodical inspection by the Inspection and Audit Division of the Bank shall also cover the activities/business conducted by BC on behalf of the bank. The BC hereby agrees that the Bank shall have right to inspect the transactions/documents relating to the transactions under this agreement. 15. The BC assures that he/she/it is competent to execute this agreement and to perform all its obligations in accordance with the terms herein set out. 16. The work done by the BC shall be monitored by the Bank periodically. 17. The BC agrees that execution of this agreement with the Bank is in no way entitles or empowers the BC to seek employment in or any other benefits from the Bank in any manner whatsoever, as he/she/it is only a correspondent. IN WITNESS WHEREOF, the parties have signed this agreement on the day, month and year hereinabove mentioned. BUSINESS CORRESPONDENT Andhra Pragathi Grameena Bank WITNESS: 1. 2.

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SCHEDULE – I

INSTRUCTIONS REGARDING MODE OF OPERATION

SCHEDULE – II Signature of the Authorized Bank Official (Address) Signature of the Business Correspondent Signature of Witnesses 1………………………………… …………………………………. …………………………………. (Name & Address)

2………………………………… …………………………………. …………………………………. (Name & Address)

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ANNEXURE VI RATING PARAMETERS FOR SELECTING NGOs

CRETERIA ASSESSMENT BASIS MARKS

Representative Nature of NGO

Based & functioning in the command area of the Branch

20

Based elsewhere but with a local/ representative office functioning in the Command Area of the Branch

15

Based elsewhere but functioning in the command area of the Branch.

10

NGO’s Existence More than 7 years 20

5 – 7 years 10

3 – 5 years 05

Reach of NGOs under their current programme

Above 50 villages 20

25 – 50 villages 15

10 – 25 villages 10

Audit/ Transparency in operations

Audit upto date with no serious defects 20

Audit in arrears for not more than one year with no serious defects

10

Organizational capacity & Managerial competence

Availability of experience and professional staff 10 (0-10)

Adequacy of infrastructure 5 (0-05)

In House Training Arrangements 5 (0-05)

A minimum of 60 marks shall be obtained for considering NGO as Business Correspondent

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