WHITE LABEL ATMs

 White Label ATMs are ATMs that are owned and operated by non-banking entities. ATMs operated under this business model allow customers to use them for banking transactions regardless of the bank they have an account with.

RBI approved the operation and inclusion of WLA ATM by non-banking organisations under the Payment and Settlement Systems Act of 2007. It was introduced to expand India’s ATM network, especially in semi-urban and rural areas. 

White Label ATM companies work with banking networks to enable bank customers to use banking services like withdrawing funds, paying bills and depositing cash. White Label ATM (WLA) operators charge card-issuing bank fees to provide this facility to the bank’s clients.  

The transaction process in White Label ATM operators consists of a lending bank, a sponsor bank that handles settlements and an ATM network provider. The Sponsor bank provides the cash facility for the White ATM.

Services at a white label ATM:

• Dispensing cash as per your requirement
• Depositing cash
• Checking your account information
• Making regular bill payments
• Generating a mini or short statement 
• Changing your PIN
• Requesting for a new cheque book

Benefits of White Label ATMs:

• Customers benefit from White Label ATMs since they eliminate the need to visit a bank branch on a regular basis
• ATMs are available 24 hours a day, seven days a week, including holidays
• Banks benefit from this because they do not have to maintain a huge staff/office (compared to a system without ATMs). It lowers their branch-operational costs
• Financial inclusion of rural, semi-urban, and low-income people
•  It allowed ATM cards to be issued by any bank that can be used at White Label ATMs
• WLA ATM also provides mobile recharge, energy bill payments, and other value-added services

 Limitations of White Label ATMs:

• The issue of unsuccessful transactions is a key source of concern. In the event of a dispute, the dispute resolution method will include three entities, namely the WLA operator, the WLA operator’s sponsor bank, and the customer’s bank and will typically take a lengthy time
• Customers will be discouraged by the cost issue, as they will be obliged to pay a price to use the White Label ATMs, as only a limited number of free transactions are permitted on the WLAs
• White label ATMs’ financial viability is questioned because of their low interchange charge and hefty operational expenses
• If there is a bank-managed ATM in the same area as a WLA ATM, the White Label ATMs may not be able to generate a profit

AEPS AADHAAR ENABLED PAYMENT SYSTEM

 A new payment service offered by the National Payments Corporation of India to banks, financial institutions using 'Aadhaar Enabled Payment System.

In order to further speed track Financial Inclusion in the country, Two Working Groups were constituted by RBI on MicroATM standards and Central Infrastructure & Connectivity for Aadhaar based financial inclusion transactions with members representing RBI, Unique Identification Authority of India, NPCI, Institute for Development and Research in Banking Technology and some special invitees representing banks and research institutions.

The working group on MicroATM standards & Central Infrastructure & Connectivity has submitted its report to RBI. As a part of the working group it was proposed to conduct a Lab level Proof of concept (PoC), integrating the authentication & encryption standards of UIDAI, to test the efficacy of MicroATM standards and transactions using Aadhaar before they are put to actual use. The PoC was successfully demonstrated at various venues.

AePS is a bank led model which allows online interoperable financial inclusion transaction at PoS (MicroATM) through the Business correspondent of any bank using the Aadhaar authentication.AePS allows you to do six types of transactions.

The only inputs required for a customer to do a transaction under this scenario are:-

• 1. Bank Name
  2. Aadhaar Number
  3. Biometrics captured during enrolment

Objectives

• To empower a bank customer to use Aadhaar as his/her identity to access his/ her respective Aadhaar enabled bank account and perform basic banking transactions like cash deposit, cash withdrawal, Intrabank or interbank fund transfer, balance enquiry and obtain a mini statement through a Business Correspondent
• To sub-serve the goal of Government of India (GoI) and Reserve Bank of India (RBI) in furthering Financial Inclusion.
• To sub-serve the goal of RBI in electronification of retail payments.
• To enable banks to route the Aadhaar initiated interbank transactions through a central switching and clearing agency.
• To facilitate disbursements of Government entitlements like NREGA, Social Security pension, Handicapped Old Age Pension etc. of any Central or State Government bodies, using Aadhaar and authentication thereof as supported by UIDAI.
• To facilitate inter-operability across banks in a safe and secured manner.
• To build the foundation for a full range of Aadhaar enabled Banking services.

Banking Services Offered by AePS

• Cash Deposit
• Cash Withdrawal
• Balance Enquiry
• Mini Statement
• Aadhaar to Aadhaar Fund Transfer
• Authentication
• BHIM Aadhaar Pay

Other Services offered by AePS:

• eKYC
• Best Finger detection
• Demo Auth
• Tokenization
• Aadhaar Seeding Status

NUUP | National Unified USSD Platform

 NUUP (National Unified USSD Platform) is a USSD based mobile banking service from NPCI that brings together all the Banks and Telecom Service Providers. In NUUP, a customer can access banking services by just pressing *99# from his/her mobile phones. This service works across all GSM mobile handsets

Unstructured Supplementary Service Data (USSD) is a technology unique to GSM (Global System for Mobile Communications) handsets. It is a capability built into the GSM standard to support transmitting information over the signaling channels of the GSM network. USSD provides session-based communication, enabling a variety of applications. USSD technology, which was primarily used in the field of telecommunication, is going to make a significant impact in the field of banking services through NUUP.

Key benefits of NUUP

- Accessible through common code - *99# across all Telecom Service Providers.

- Works across all GSM mobile handsets. No application installation required on the mobile handset and the service also has interactive menu.

- Round the clock availability (functional even on holidays).

- Provides variety of Banking and Value added service.

- GPRS is not required-works only on voice connectivity.

- Additional channel for banking and a Key catalyst for spreading financial inclusion reach.

- No additional charges while roaming.

Services available under NUUP

- Non-Financial

- Financial

- VAS

- Balance Enquiry- User can check his/her available balance of the bank account linked to mobile number.

- Mini Statement User can generate mini account statement for his/her bank account linked to mobile number.

- Know MMID *(Mobile Money Identifier)-User can know their MMID which was allotted to him/her by bank during mobile banking registration.

- Generate-PIN-User can Generate or Set the M-PIN. M-PIN or Mobile PIN is like a password and used for authenticating financial transactions

- Change M-PIN-User can change the M-PIN. M-PIN or Mobile PIN is like a password and used for authenticating financial transactions.

- Generate OPT-User can generate One Time Password (OTP) which can be used for different transactions as a second factor of authentication.

- Fund Transfer using Mobile No. and MMID-User can transfer fund by using MMID and Mobile number of the Beneficiary.-

- Fund Transfer using IFSC and Account No. - User can transfer fund by inputting IFS code and Account number of the Beneficiary.

- Fund Transfer using Aadhaar-User can transfer fund by inputting Aadhaar number of the Beneficiary

BROWN LABEL ATMs

'Brown label' ATMs are those Automated Teller Machines where hardware and the lease of  the ATM machine is owned by a service provider, but cash management and connectivity to banking networks is provided by a sponsor bank whose brand is used on the ATM.

The 'brown label' has come up as an alternative between bank-owned ATMs and 'white label' ATMs. As in India white label ATMs were not allowed by RBI (in February 2012 RBI has issued the draft guidelines for introduction of white ATMs, but final approval is yet to come), the concept of Brown Label ATMs started picking up. 

On account of the high cost of ATM machines and RBI's guidelines for expansion of ATMs, the concept of Brown Label ATM network is likely to expand at a brisk pace in the next few years. 

In recent years there is a visible shift in the way banks look at ATM business. From the earlier model where banks used to buy outright machines and bear the cost of service, they are now preferring brown label ATMs where the machine and service is outsourced.

ROLE OF NABARD

National Bank for Agriculture and Rural Development (NABARD) was established on July 12, 1982 with the paid up capital of Rs. 100 cr. by 50: 50 contribution of government of India and Reserve bank of India.

It is the apex banking institution to provide finance for Agriculture and rural development.

It is an apex institution in rural credit structure for providing credit for promotion of agriculture, small scale industries, cottage and village industries, handicrafts etc.

FUNCTIONS

NABARD was established as a development bank to perform the following functions:

1. To serve as an apex financing agency for the institutions providing investment and production credit for promoting various developmental activities in rural areas;

2. To take measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions and training of personnel;

3. To coordinate the rural financing activities of all institutions engaged in developmental work at the field level and liaison with the Government of India, the State Governments, the Reserve Bank and other national level institutions concerned with policy formulation; and

4. To undertake monitoring and evaluation of projects refinanced by it.

5. NABARD gives high priority to projects formed under Integrated Rural Development Programme (IRDP).

6. It arranges refinance for IRDP accounts in order to give highest share for the support for poverty allevia­tion programs run by Integrated Rural Development Programme.

7. NABARD also gives guidelines for promotion of group activities under its programs and provides 100% refinance support for them.

8. It is setting linkages between Self-help Group (SHG) which are organized by voluntary agencies for poor and needy in rural areas.

9. It refinances to the complete extent for those projects which are operated under the ‘National Watershed Development Programme‘ and the ‘National Mission of Wasteland Development‘.

10. It also has a system of District Oriented Monitor­ing Studies, under which, study is conducted for a cross section of schemes that are sanctioned in a district to various banks, to ascertain their performance and to identify the constraints in their implemen­tation, it also initiates appropriate action to correct them.

11. It also supports “Vikas Vahini” volunteer programs which offer credit and development activities to poor farmers.

12. It also inspects and supervises the cooperative banks and RRBs to periodically ensure the development of the rural financing and farmers’ welfare.

13. NABARAD also recommends about licensing for RRBs and Cooperative banks to RBI.

14. NABARD gives assistance for the training and development of the staff of various other credit institutions which are engaged in credit distributions.

15. It also runs programs for agriculture and rural development in the whole country.

16. It is engaged in regulations of the cooperative banks and the RRB’s, and manages their talent acquisition through IBPS CWE conducted across the country.

Role of NABARD:

1. It is an apex institution which has power to deal with all matters concerning policy, planning as well as operations in giving credit for agriculture and other economic activities in the rural areas.

2. It is a refinancing agency for those institutions that provide investment and production credit for promoting the several developmental programs for rural development.

3. It is improving the absorptive capacity of the credit delivery system in India, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, and training of personnel.

4. It co-ordinates the rural credit financing activities of all sorts of institutions engaged in developmental work at the field level while maintaining liaison with Government of India, and State Governments, and also RBI and other national level institutions that are concerned with policy formulation.

5. It prepares rural credit plans, annually, for all districts in the country.

6. It also promotes research in rural banking, and the field of agriculture and rural development.

Some of the milestones in NABARD's activities are:

Business Operations:

1. Production Credit: NABARD sanctioned aggregating of 66,418 crore short term loans to Cooperative Banks and Regional Rural Banks (RRBs) during 2012-13, against which, the maximum outstanding was 65,176 crore.

2. Investment Credit: Investment Credit for capital formation in agriculture & allied sectors, non-farm sector activities and services sector to commercial banks, RRBs and co-operative banks reached a level of 17,674.29 crore as on 31 March 2013 registering an increase of 14.6 per cent, over the previous year.

3. Rural Infrastructure Development Fund (RIDF)

Through the Rural Infrastructure Development Fund (RIDF) 16,292.26 crore was disbursed during 2012-13. A cumulative amount of 1,62,083 crore has been sanctioned for 5.08 lakh projects as on 31 March 2013 covering irrigation, rural roads and bridges, health and education, soil conservation, drinking water schemes, flood protection, forest management etc.

New Business Initiatives:

1. NABARD Infrastructure Development Assistance (NIDA):
NABARD has set up NIDA, a new line of credit support for funding of rural infrastructure projects. The sanctions under NIDA during the year 2012-13 was 2,818.46 crore and disbursement was 859.70 crore.

2. Direct refinance assistance to CCBs for short term multipurpose credit:
Direct refinance assistance to CCBs was conceived and additional line of finance for CCBs in the light of recommendations of the “Task Force on Revival of Short Term Rural Cooperative Credit Structutre, which enables the latter to raise financial resources other than from StCBs. During 2012-13, refinance assistance aggregating 3,385 crore was sanctioned to 42 CCBs and disbursement stood at 2,363.45 crore.

Now it can be conclude that the Agricultural & rural development is totally dependent on the efficiency of the NABARD, which is doing its job as per the requirements of the economy.

ROLE OF SIDBI | SIDBI - SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA

The Small Industries Development Bank of India (SIDBI) is India's apex regulatory organization for licensing and regulating micro, small, and medium enterprise finance firms. 

It is governed by the Ministry of Finance of the Government of India, which is headquartered in Lucknow and has offices all around the country. 

Its mission is to provide refinance facilities to banks and financial organizations, as well as engage in term lending and working capital finance to industries, and it serves as the MSME sector's primary financial institution.

SIDBI – is led by Shri Sivasubramanian Ramann as Chairman and Managing Director. 

SIDBI was given the task of administering the Small Industries Development Fund and the National Equity Fund, which were formerly overseen by IDBI. 

SIDBI is the primary financial institution for the MSME (Micro, Small, and Medium Enterprise) sector’s promotion, development, and financing. SIDBI encourages cleaner production and energy efficiency in addition to focusing on the development of the Micro, Small, and Medium Enterprise sector.

SIDBI assists MSMEs in obtaining the funding they need to expand, market, develop, and commercialize their innovative products and technology. The bank offers a variety of programs as well as financial services and products to satisfy the needs of individuals and businesses.

Small Industries Development Bank of India (SIDBI) is an autonomous financial institution dedicated to assisting the growth and development of Micro, Small, and Medium Enterprises (MSMEs), which make important contributions to the national economy in terms of output, employment, and exports.

SIDBI was founded with the goal of facilitating and increasing the flow of credit to Micro, Small, and Medium Enterprises, as well as solving developmental and financial gaps in the MSMEs ecosystem

It was formed by an Act of Parliament on April 2, 1990  

Finance facilities offered by SIDBI

Customers of the SIDBI can take advantage of the following services:

Direct Finance Under its different direct finance credit programs, SIDBI provides Working Capital Assistance, Term Loan Assistance, Foreign Currency Loan, Support against Receivables, equity support, and an Energy Saving Scheme for the MSME sector, among others. 

Indirect Finance SIDBI provides indirect aid by refinancing PLIs (Primary Lending Institutions), which include banks, State Level Financial Institutions, and other financial institutions with a large branch network throughout the country. The refinancing scheme’s main goal is to improve Primary Lending Institutions’ resource position, allowing credit to flow to the MSME sector in the long run. 

Micro Finance  The SIDBI provides microfinance to small business owners and entrepreneurs.

Functions of SIDBI

SIDBI refinances loans made by PLIs to small-scale industrial enterprises and provides them with resources

Bills are discounted and rediscounted by it

It also aids in the expansion of marketing channels for SSI (Small Scale Industries) sector products in both domestic and foreign markets

It provides factoring, leasing, and other services to small-scale industrial businesses

It encourages employment-oriented industries, particularly in semi-urban areas, in order to create jobs and prevent people from moving to cities

It also makes attempts to modernize and upgrade current units technologically

In collaboration with commercial banks, it also ensures the timely flow of credit for working capital as well as term loans to Small Scale Industries

It also works with state-level venture funds to promote them

Non-Financial Interventions

SIDBI had previously adopted numerous non-financial measures in the MSME sector as part of its non-financial intervention. It recently launched “CriSidEx” and “MSME Pulse” in collaboration with credit rating agency CRISIL and credit information company TransUnion CIBIL.

CRISIL and SIDBI collaborated to create CriSidEx, India’s first sentiment index for micro and small businesses (MSEs). It is a composite index that represents MSE business sentiment on a scale of 0 to 200 and is based on an 8-parameter diffusion index. CriSidEx’s most important benefit is that its readings will alert you to prospective headwinds and changes in production cycles, allowing you to increase market efficiency. It would also provide actionable indicators on foreign trade by recording the sentiment of exporters and importers.

SIDBI, in collaboration with TransUnion CIBIL, launched “MSME Pulse” and Equifax launched Microfinance Pulse, a quarterly report on MSME credit activities, to track and monitor the MSME segment in the country. The research is based on a survey of more than five million active MSMEs in India who have access to formal credit and live credit facilities through the banking system.

SIDBI has launched the “Udyami Mitra” Portal to make loans and handholding services more accessible to MSMEs. Through this portal, they can choose and apply for preferred banks. Entrepreneurs can use the portal to apply for a loan without having to physically visit a bank branch. They can choose from over 1 lakh bank branches, follow their application status, and take advantage of a variety of lending incentives. It also allows you to upload all of your relevant paperwork. MSMEs can also seek assistance in obtaining financing through the portal. SIDBI has also reached an agreement with CSC e-governance Services (CSCeGS) to bring the Udyami Mitra portal to MSMEs who are unserved or underserved. CSCeGS is a special purpose vehicle (SPV) established by the Ministry of Electronics and Information Technology to connect villages around the country to various digitally aligned services.

SIDBI’s major goal is to give financial support to all SSIs in India via SFCs and SSIDCs. 

SIDBI’s goal is to promote India’s industrial development by focusing on small-scale industries rather than large-scale industries. 

SIDBI’s profits are funneled into reserves to the utmost extent possible. It has greater borrowed capital; therefore, a big amount of income is used to pay long-term securities interest. 

SIDBI’s activities, as they have grown over time, currently satisfy practically all of the needs of small-scale companies, which span a broad range from modern and technologically advanced units on one end to traditional units on the other.

NEGOTIABLE INSTRUMENTS ACT, 1881

The Negotiable Instruments Act, 1881 is a significant law that governs the use of negotiable instruments in India. 

It provides for the regulation of promissory notes, bills of exchange, and cheques. 

The Act was enacted to provide a uniform legal framework for the use of negotiable instruments in India. 

The Act has been amended several times to ensure that it is in line with the changing business practices and legal requirements.

Promissory Notes:

A promissory note is a written promise to pay a specific amount of money to the person named in the document. The person making the promise is called the ‘maker,’ and the person to whom the payment is to be made is called the ‘payee.’ The promissory note can be transferred by endorsement and delivery.

In the case of State Bank of India vs. Gangadhar Ramchandra Panse, the court held that a promissory note must contain an unconditional promise to pay a specific amount of money. If the promise is conditional, the document will not be considered a promissory note.

Bills of Exchange:

A bill of exchange is a written order by the maker to the payee to pay a certain amount of money to a third party. The person who issues the bill is called the ‘drawer,’ and the person to whom the payment is to be made is called the ‘drawee.’ The person in whose favor the payment is to be made is called the ‘payee.’ The bill of exchange can be transferred by endorsement and delivery.

In the case of Bank of India vs. O.P. Swarnakar, the court held that a bill of exchange is a negotiable instrument that can be transferred by endorsement and delivery. The transfer of a bill of exchange is valid even if the transferor does not own the instrument at the time of transfer.

Cheques:

A cheque is a written order by the drawer to the bank to pay a certain amount of money to the payee. The bank is required to pay the amount mentioned in the cheque to the payee or their authorized representative. The cheque can be transferred by endorsement and delivery.

In the case of Canara Bank vs. Nuclear Power Corporation of India Ltd, the court held that a cheque must be drawn on a specified bank and must not be expressed to be payable otherwise than on demand. The court also held that the bank is under a legal obligation to pay the cheque amount to the payee or their authorized representative, even if the drawer has insufficient funds in their account.

The Negotiable Instruments Act, 1881 provides for the legal recognition of negotiable instruments and the rules for their use. The Act ensures that the transfer of negotiable instruments is simple and efficient, making them an essential tool for business transactions. The Act also provides for the legal framework for disputes related to negotiable instruments.

Conclusion

The Negotiable Instruments Act, 1881 provides a legal framework for the use of negotiable instruments in India. It is important to understand the provisions of the Act and the relevant case laws to ensure that negotiable instruments are used in a legally compliant manner. The Act ensures that the transfer of negotiable instruments is simple and efficient, making them an essential tool for business transactions.

Ref: Times of India