Role of State Owned Banks in Financial Inclusion

Report
By Nilammasri Ja’afar
Senior Vice President/Head
Micro Finance
Asia Microfinance Forum
4-8 August 2014
Shanghai, China
Bank Simpanan Nasional – Your Community Bank
Regulated & Supervised by Ministry
of Finance and Bank Negara
Malaysia
Established under
the Act of
Parliament 146 Laws of Malaysia
1974.
BSN’s Objectives:
• Promote and mobilise savings,
particularly from small savers
• Inculcate the habit of thrift and
savings.
• Provide an avenue for savings
to the general public.
• Utilise excess funds of the Bank
to help finance economic
development of the nation
2
BSN Today – An Overview
6,800 Employees
5,300 agents
401 Branches 100%
nationwide coverage
59 Micro Finance Centres
85 Islamic branches
899 ATMs
10 Mobile Banking Units
> 8.5 mil customers
> 0.7 mil SMS Banking Users
> 0.35 mil Internet Banking Users
344 CDMs
3
Financial Inclusion : BSN’s Driving Agenda
• Under-served
communities
• Non- urban
areas
• Non-economical
areas
• Low population
Financial services to
micro entrepreneurs –
viable middle to lower
income businesses
Mandated to
BSN ;
Providing
Financial
Access
Reach
Scalability
Cheaper
cost to
serve
A better way…
4
BSN Agent Banking: Innovation in Extending Access to All
Normal
Practice





Form-based
Manual input
Fixed line
Longer process
Less Coverage
Customers
visiting branches
• Online
• Real-time
Bring BSN to the
Community
Services: Savings & Deposits, Bills
& Loans Payments, Remittances &
Cashless Payments
 Formless
 Automated
 Wireless
GPRS
 Simplified
process
 Increased
coverage
Innovative
Idea
5
BSN Agent Banking : Cost Effectiveness
Agent Banking Set-up Cost
ITEMS
Set-up Cost
(One-off)
COST
MYR4,800
(USD1,487)
POS Terminal
Signage
Point-of-Sales Materials
Yearly Operating Cost
Branches
Costs
MYR1,950
(USD605)
Maintenance
Network Access Fee (GPRS)
Thermal Paper
Total Cost (First Year)
Cost Comparison – Branch VS ATM-Off Premise
VS Agent Banking
MYR6,750
(USD2,092)
ATM-Off
Premise
Agent
Banking
% Cost
Savings –
Agent
Banking VS
Branches
MYR / USD
Set-up Cost
(One-off)
Yearly Operating
Cost
MYR500,000
(USD155,000)
MYR45,000
(USD14,000)
MYR5,000
(USD1,500)
99.04%
MYR250,000
(USD78,000)
MYR40,000
(USD12,400)
MYR2,000
(USD600)
99.24%
Cost Effectiveness : Branch VS
Agent Banking
1 Brick-and-Mortar Branch
100 Innovative Agent Banking
Outlets
6
BSN Agent Banking & Sustainable Development
The Nation
Supports the
Government ‘s
National Agenda
• National Blue
Ocean Strategy
(Cost
effectiveness,
rapid expansion,
high impact)
• Financial Inclusion
Communities
& BSN agents
Expansion &
development of
local
communities
• BSN agents are
also agents of
growth in their
own communities
• Knowledge of IT
and banking
Environment
BSN
Reduces BSN’s
carbon footprint
Perpetual
demand for
banking services
sustains BSN’s
growth
Longer working
hours: 8am –
10pm
• Reduces setup of
brick-and-mortar
branches
• Carbon-friendly as
less emission of
CO2.
7
BSN Agent Banking : Effective Coverage
Before BSN Agent Banking
Served
388
43%
After BSN Agent Banking
Total
Total
Sub-District
895
Sub-District
895
Un-served
507
57%
Served
388+495
99%
Un-served
12
1%
By end 2014, BSN would have covered 100% of the Sub-Districts in
Malaysia, with an additional 1,000 agents to be appointed.
8
BSN Micro Finance : Agents of Social Economic Change
Micro Finance is viewed as a
development approach that
provides financial as well as
social intermediation.
Assists the poor to generate
income & employment via self
employment i.e. micro
enterprises.
Ultimate objective is to
alleviate the poor out of
poverty.
The other key objective is to
transform fledgling micro
enterprises into the next level
i.e. SMEs
9
Most Establishments in Malaysia are Micro Enterprises
• Micro Enterprises
comprised 77% of all
SMEs in Malaysia
• Employs 1.3 million
workers or 36.5 % of
all SMEs
• Average 3 workers per
establishment
Source
Economic Census 2011, Profile of Small and Medium Enterprises by Department of Statistics, Malaysia
10
But Majority of Micro Enterprises are Self Funded…..
Only 17.4 % of micro
enterprises relied on
financing from financial
institutions (FIs)
Sources of financing by size of SMEs, 2010
Micro enterprises lacked
financing from FIs
due to : Lack supporting
documents-no proof
of income & expenses
 No collateral
 High transaction costsmall loan sizes
Source
SME Census 2011, Department of Statistics, Malaysia (DOSM)
11
BSN Micro Finance : Government Mandate
The National SME
Development Council (NSDC)
mandated BSN to be a
specialized Micro Finance
(MF) institution in 2006.
BSN launched its MF
Program on March 15,
2007, to provide financing
facilities to viable micro
enterprises.
12
Key Deliverables of BSN Micro Financing Scheme
• Financing to
All types of
Micro
Enterprises /
Selfemployed
Individuals
Financing Amount From RM5,000 To
• No Collateral
RM50,000
• Minimum
Documentation
Small
• Simple
Financing
Financing
Amount
Procedures
Funding for
Business
Purposes
• Widely
Accessible
• 59 Dedicated
MFC
• 401
Branches
• 5,300 EBB
Easy
Convenient
Fast
13
• Approval - 6
Working Days
• Disbursement - 4
Working Days
BSN Micro Finance Scheme : More Than Just Loans...
Besides providing
credit facilities, BSN
also extends:-
Advisory services
 Capacity building
& skills training
programs
Savings Access • Customers required
to save via regular
monthly deposits
 Instilling financial
discipline &
record
management
Insurance/Takaful
Protection
• Covers loans in
cases of death or
total permanent
disability.
• Additional monetary
benefits for
customers
(optional)
 Business & loans
counseling
 Credit clinics
14
BSN Micro Finance Scheme: Building a Sustainable Portfolio
• Financing facilities are offered on
market rates
• Effective selection & screening
process- loans/financing are extended
only to viable micro entrepreneurs
• Leveraging on existing Bank network
of 401 branches and 5,300 EBB agents
for: Deposits
 Loan repayment
 Sourcing of new credit
applications
•
Collaboration with governmental
agencies for capacity building
programs
15
BSN Micro Financing : Creating Positive Impact
Micro enterprises
gained in terms of:-
• Income & asset
growth
• Creation of new
jobs in local
communities
• Expansion- new
markets/products
• Graduation to the
next level of SME
Pre Financing
Post Financing
16
Financial Inclusion Agenda: Current Strategic Direction
Agent
Banking
(EBB)
Micro
Finance
(MF)
Existing MF
customers to
become EBB
Providing MF
to the
appointed
EBB for
business
expansion
Synergy
17
Current Status
MF
EBB
• 59 dedicated MF Centers
• Over RM800 Million disbursed to
39,000 Customers
• RM380 million loans outstanding
balance @ 44% of M’sia MF
market share among Banks
• 5,300 active agents
• Over 11.5mil transaction count
• More than RM990 million
transaction amount.
579 EBB / MF Customers (11%)
18
Strategic Collaboration- Moving Forward
EBB
Access
Points for
MF Loan
Application
MF
Cross Sell
other MF
Customers
Products
MF Loan
Collection
Distribution
Centers for
MF
Customers
19
THANK YOU
20

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