The Unconditional Cash Transfers (UCT) Programme, the core programme of BISP, was initiated in 2008. The short term objective of the programme was to cushion the adverse impacts of the food, fuel and financial crisis on the poor, but its broader objective is to meet the redistributive goals of the country by providing a minimum income support package to the chronically poor and those who are more likely to be affected negatively by future economic shocks.
Targeting process consists upon two phases:
Parliamentarian Phase: Phase-I
At the start of BISP UCT Programme in July 2008, no reliable data was available for the identification of underprivileged and vulnerable people in the country. The task of identification of the potential beneficiaries of BISP was, therefore, entrusted to the Parliamentarians, in what was termed as the Phase-I of Targeting. Application Forms were distributed among the Parliamentarians in equal number (8000 forms to each member of the National Assembly and Senate and 1000 forms to each member of the Provincial Assemblies), irrespective of party affiliation. The forms received were verified through NADRA database. Out of the total 4.2 million received forms, 2.2 million families were found eligible for cash transfers. Under this system of targeting, an amount of Rs. 26.6 billion was disbursed to a total of 1.76 million eligible families in 2008-09 @Rs.1000/- per family.
Poverty Scorecard Survey: Phase-II
The Parliamentarian Phase had its own shortcomings as it was difficult for everybody to get access and apply for the programme. There was also recognition to transform BISP into a modern safety net system with less politically subjective and more scientific targeting mechanism. In pursuance of the international best practices, the Government decided to make reforms by improving the targeting process and giving equal chances to everyone for applying to the Programme. The aim was to make targeting of the poorest in the society more objective and in transparent manner, so BISP adopted the World Bank designed instrument named “Poverty Scorecard” for identification of the poorest. Poverty Scorecard was based on Proxy Mean Testing for the selection of deprived/poorest families. A Poverty survey/census was carried out across Pakistan, which started in 2009, with the technical assistance of the World Bank. This included step wise Implementation i.e. Test Phase in year 2009 and National Rollout in year 2010.
The Nationwide Poverty Scorecard Survey, the first of its kind in South Asia, enabled BISP to identify eligible households through the application of a Proxy Means Test (PMT) that determined the welfare status of the household on a scale between 0-100. The survey was started in October 2010 (which was conducted by independent firms hired through a competitive bidding process) and has been completed across Pakistan except two agencies of FATA i.e. North and South Waziristan.
Over 27 million households have been covered under Nationwide Poverty Scorecard Survey that constituted 150.5 million population across the country. The estimated population during 2010 was 177.94 million which implies the coverage of this survey is around 85 percent. Area wise coverage statistics show that 14.88 million household covered in Punjab, 6.6 million in Sindh, 3.6 million in KPK and 1.1 million in Baluchistan. In AJK around 0.58 million, in GB 0.15 million and in FATA 0.40 million are covered. Highest coverage was in GB followed by AJK, Sindh and Punjab.
Table: Area Wise Coverage under Poverty Scorecard Survey
|Province||No. of Districts||HHs Covered (M)||Estimated Population (M)||Population Covered (M)||Population Covered (%)||Eligible Families (M)|
Using Poverty Scorecard method, around 7.7 million eligible families were identified and currently 5.7 million families are active beneficiaries as of 2016.
The BISP targeting performance falls in top five SSN programmes in the world. About 48 percent of BISP beneficiaries are coming from the poorest quintile – bottom 20 percent. The BISP targeting performance compares well with similar programs, including Brazil Bolsa Familia, Mexico Prospera (former Oportunidades), and Philippines 4P.
Source: ECA SP Performance Indicators, State of Social Safety Nets 2015, World Bank
The area wise figures show that 2.057 million beneficiaries are in Punjab, followed by 1.940 million in Sindh, 1.157 million in KP and 0.24 million in Balochistan, respectively.
Total Payments Under UCT
Initially the eligible families enrolled under BISP were paid an amount of Rs. 1000/ per month, without any conditions sanctioned on them. The present Government has expressed a strong resolve to reform the social protection mechanism in line with its manifesto. In the last 2 years, the government placed special emphasis on the expansion of BISP and improvement of its systems. BISP’s annual disbursement rose from 16 billion in FY 2008-09 to Rs.96.65 billion in FY 2015-16. Since 2008, Rs. 412 billion has been disbursed to beneficiaries
Payments Distribution Mechanism
For successful implementation of the programme, efficient and transparent payments system is essential. BISP experimented different payments distribution mechanisms. Currently, there are five payment disbursement mechanisms:
- Pakistan Post Money Orders
- Smart Card payment dispersal System
- Mobile Banking System
- Debit Card System
- Bio-Metric Verification System (BVS)
Payments through Pakistan Post
Initially under Phase-1, BISP was distributing its funds through Pakistan Post in the shape of Money Orders delivered by the postman at the door step of the beneficiary. This was the first method adopted by BISP for the disbursement of payments. Additionally, some beneficiaries were compelled to travel to the Post Office in cases where the PostOffice/Postman refused to deliver payments at the doorstep of the beneficiary due to various reasons. Payments are made available after every two months as per the design of the system. Since its inception, so far Rs. 64562 million in Phase-I and Rs. 67901 million in Phase-II has been disbursed through Pakistan Post. BISP has gradually shifted beneficiaries from Pakistan Post to other technically sounders modes of payment.
Table: Year Wise Cash Transfer to BISP Beneficiaries through Post Office
|No of Beneficiaries||Amount Disbursed (Rs. Million)||No of Beneficiaries||Amount Disbursed (RS. Million)|
Source: Payment Wing
Smart Card Payment Dispersal System
Due to complaints received about the Pakistan Post payment system, Smart Card payment mechanism was introduced in a few districts (Multan, Mianwali, Sanghar and MirpurKhas) in 2010 as an alternative to the Pakistan Post system. The Benazir Smart Card (BSC) is an Automatic Teller Machine (ATM) type card which allows the beneficiaries to collect their transferred installment from different franchises in the district. These franchises were authorized by BISP and provided with the required cash for payment to the beneficiary. UBL is the partner bank for BSCs. The beneficiary was required to collect the payment personally from the franchise on identification through her CNIC. A receipt was also signed by the beneficiary. So far Rs. 12896 million has been disbursed through Smart Card.
Table: Year Wise Cash Transfer to BISP Beneficiaries through Benazir Smart Card
|No of Beneficiaries||Amount Disbursed (RS. Million)|
Source: Payment Wing
Mobile Banking Payment Mechanism
BISP started delivering cash grants through mobile banking in December 2010. This was to be rolled out in eight districts but due to security situation, could only be started in five districts (Layyah, Larkana, Rawalpindi, Islamabad and Battagram). In this mode of payment, beneficiaries are provided a mobile set and a SIM card, and are informed of the availability of payment by an Interactive Voice Response (IVR) Service. The payment is then collected from a franchise using the Personal Identification Number (PIN) that is also sent via text message. The beneficiary is required to collect the payment personally from the franchise on identification through her CNIC. A receipt is also signed by the beneficiary. Rs. 10021 million has been disbursed through Mobile Phone.
Table: Year Wise Cash Transfer to BISP Beneficiaries through Benazir Mobile Phone
|No of Beneficiaries||Amount Disbursed (RS. Million)|
Source: Payment Wing
Debit Card Payment Mechanism
From February 2012 BISP started a major changeover in payment system – from money orders delivered by Pakistan Post to payments through Benazir Debit Cards (BDCs). This mode of payment is based on an ATM card which allows the beneficiary to withdraw payment installments through the ATM of a bank authorized by BISP. BISP transfers the funds to the bank who in turn distributes it to the beneficiaries. This is the latest mode of payment and is now being introduced in all the districts.
Table: Year Wise Cash Transfer to BISP Beneficiaries through Benazir Debit Card
|No of Beneficiaries||Amount Disbursed (RS. Million)|
Source: Payment Wing
Proposed Improvements in the existing payment mechanism using BVS
Over a period of time BISP has undergone various experiences starting from Pakistan Post, Mobile Phone payment, and payment through smart cards. Lastly the Benazir Debit Card was found to be the best suited for payment purpose. Under the existing system, payments are made through Debit cards from the touch points of the partner banks which include both ATMs and POS. As observed over a period of time the prevalent instrument (BDC) used for withdrawal too has limitations/weaknesses like:
- Mostly are being illiterate beneficiaries don’t know how to use the card.
- Frequent complaints of card loss/damaged
- PIN code lost
- Middlemen involvement in card usage under the garb of facilitation to the beneficiary whereby commission is charged by the middlemen.
According to the current statistics more than 80% complaints are related to card issuance, replacement and PIN code lost. Being cognizant of the service delivery issues BISP management has taken certain steps aimed at improvement in existing payment mechanism to serve the beneficiaries in a transparent and efficient manner. Based on lesson learned another user friendly approach has been conceived for payment through biometric verification system (BVS). One of the important measures is change in withdrawal instrument; in future beneficiaries would withdraw money through biometric verification. Salient features of the new model are as follows; –
CNIC+BIOMETRIC+SIM CARD: This approach to begin with will be adopted at agents’ locations where payment is drawn by the beneficiary from POS. Under this approach there would be certain districts particularly currently being handled by Pakistan Post and other six districts of mobile banking and smart card would be given preference. These are the districts where there is less availability of ATMs and major reliance is on POS network. However, as per the instructions of State Bank of Pakistan all Banks are under obligation to introduce BVS at all touch points in due course of time. BISP will complete conversion of all operations under different modes of payments i.e Pakistan Post, BDC, Smart card and mobile phone to BVS till June 2017 starting from September 2016. The proposed model would have following strengths:
- It ensures personal presence of the beneficiary at the time of withdrawal of money contrary to the existing one where the beneficiary herself is not self- recipient of money in majority of cases.
- Less complicated security tiers of withdrawal; only CNIC would be presented at POS by the beneficiary to verify her credentials before making payments.
- Beneficiary does not require high level of financial literacy for withdrawal of money as required for usage of Debit card.
- SIM card will be only for the purpose of tagging with beneficiaries accounts establishing direct communication linkages with the beneficiary to inform about available balance in her Account and other related communications as and when required. SIM card will not be tagged with cash out purpose as a security layer while it will help facilitate in establishing communication links with beneficiaries which would save them from exploitation by unscrupulous agents of the society, besides, SMS/IVR alerts for her accounts activities would become possible, and it would also help in complaint management by BISP.
- The proposed model will enhance transparency with minimum involvement of human factor as the transactions will be relying on systems, instead of human involvement.
- a) Conversion of Smart card districts to BVS: Four districts i.e. Multan ii) Mianwali iii) Sangher iv) Mirpurkhas have been shifted to payment through Biometric Verification System (BVS). A total of 95000/ beneficiaries in four districts have switched over to BVS since last quarter tranche 2015-16. Around 87% beneficiaries have successfully withdrawn their tranche making use of biometric system. Besides, Larkana District, with beneficiary count of 64000 has already shifted to BVS since June 2016.
- b) Mobile banking districts: Two districts i.e. Layyah and Batagram are being shifted to BVS based withdrawal from the disbursement of 1st quarter tranche by the end of September 2016. A total of 61000 beneficiaries in these two districts will be benefited/ paid through biometric verification by start of 1st quarter tranche. Besides, two more districts (BDC) i.e Buner and Rahim Yar Khan are also being shifted to BVS during said tranche.
- c) Post office Districts: Currently 332,000 beneficiaries in 32 districts throughout the country are being served through Pakistan Post. All these districts are already allocated amongst existing Banks. Due to connectivity, outreach and law and order situation in these districts the disbursement was made through Pakistan Post. Now due to improvement in law and order situation and connectivity in these areas, the partner banks are being engaged to operate in these districts. By disbursement of last quarter tranche of 2016-17 Post office districts are planned to be handled 100% by partner banks ensuring BVS withdrawal in the areas of their respective jurisdiction.
- d) Conversion of existing POS to BVS: The existing partner banks will convert all POSs on biometric withdrawal; a complete road map with the banks is being finalized so as to complete switch over to BVS by June 2017. During negotiation with the banks for extension in contracts for next term of one year, the banks would be under obligation to meet the shortfall of agreed point of sales (POS) and ensure 100% biometric enabled POS for withdrawal by end of current FY. 2016-17. Moreover State Bank has also issued instructions to all financial institutions to ensure biometric based withdrawal by 30th June, 2017. All BDC operations are expected to shift to BVS by June 2017. 70% of BISP payments will be done biometrically by Dec, 2017.
- e) Monitoring mechanism: In order to mitigate beneficiary’s grievances comprehensive monitoring mechanism is being devised to monitor and supervise operational activities at POS level to ensure grievance redressal of the beneficiaries. Under SBP regulations the partner Banks are under obligation to put in place a robust agents oversight mechanism and submit monthly report on such complaints against agents which includes punitive actions i.e. blacklisting and termination of their contracts. In collaboration with partner banks a joint monitoring mechanism will be put in place to enhance oversight on performance of agent network to mitigate grievances of the beneficiaries.
- g) Performance indicators: BISP has defined certain performance indicators with timelines for the partner banks to fulfill performance milestones i.e establishment of new POS where required, conversion of existing BDC, mobile phone and post office operations to BVS, complaints against payment agents (POS), payment related grievances of beneficiaries etc. In case of non-compliance to achieve the defined service delivery milestones, penalty levels against each indicator have also been defined.
Till date 90% of beneficiaries drawing their Income support funds through debit card, 1% through Mobile banking and 3% through Biometric mechanism and 6% still receiving funds through Pakistan Post due to Security and connectivity issues in remote and sensitive areas including FATA and Baluchistan.
Key Achievements over the Last Two Years
For the first time payments have been made on time during 2014-15 and 2015-16. Ten quarterly beneficiary grants have been successfully disbursed, including 8 quarterly grants and two mini generations. BISP has made significant improvement in contract management. For example, marked reduction in service charges is done. Service charges have been reduced from 4% to 2.75% in Smart Card and Mobile cases while from 3.1% to 2.75% charges have been reduced in case of BDC.
Significant improvement in payment mechanism has been made to make it more efficient, transparent and user-friendly. To promote transparency and ensure accountability BISP has various technology based initiatives including:
- Payment Verification Interface (PVI)
- Online Monitoring through Dashbaord
- Payment Complaints Management System(PCMS)
Point of Sale (POS) Rationalization
BISP is committed to deliver payment services to its beneficiaries closest to their door step. BISP beneficiaries are dispersed in wide geographical locations across the country and it is a challenge for BISP to provide the disbursement services in a cost effective manner. In this context, BISP has recently undertaken an assessment of the POS/ATM availability. This exercise has highlighted the fact that the partner banks are deficient in establishing POSs causing difficulties to beneficiaries in getting cash on time closer to their homes. Negotiations are being held with the banks to increase number of POS agents and ATM to match beneficiary concentration.
Improvements in Field Operations of BISP
Field operations have been re organized as North and South operations. Spot checks during payment disbursement days were initiated. Field officers are required to visit at least one payment site on daily basis.. Active monitoring was carried out by field operations in the smart card districts Mac binding of PCMS IDs of Assistant Directors has been done which reduce 99 percent of misuse of IDs. It may be noted that 80 percent corruption cases are associated with misuse of IDs through which BDC are replaced by AD in tehsil offices
Steps Taken to Address Corruption
In order to show BISP’s resolve for zero tolerance against corruption, Field operations have sent eight cases of different nature to FIA for investigation. This has helped curb the role of touts and agents significantly by creating strong deterrence for any financial mismanagement. Cases related to the possible banks role in corruption and fraud are also sent to FIA Cyber Crime wing after preliminary investigations as these are very complicated in nature and require expertise that BISP does not have. A proposal has been developed by the M&E wing for establishment of Vigilance Cell at BISP to monitor and preempt fraudulent practices through software’s generated alerts. This is a very sophisticated data analysis tool which generates reports on daily basis and will help in effective monitoring of Banks and Field operations alike. Field Operations have also initiated number of in house inquiries to strengthen the slogan of Say NO TO CORRUPTION.
BISP FORI RABTA (Helpline)
General public and BISP beneficiaries can register their complaints on BISP hotline number 0800-26477. It works from 9am to 11pm. Various dashboards have been designed and Corporate Management adopted for efficient and improved service delivery. Chairperson, BISP goes live on Radio Pakistan along with Case Management Specialist on weekly basis. BISP beneficiaries from all the provinces including FATA, Gilgit-Baltistan and Kashmir inform Chairperson about their grievances and discuss their problems. The issues of beneficiaries are resolved on spot through case management system.
Introduction of Quick Book
BISP has introduced new accounting systems such as QuickBook software in order to streamline its internal accounting procedures. Moreover, systematic reconciliation with Partner Banks is in place since Nov, 2015 to ensure accurate, transparent payments & withdrawals.
Beneficiary Feedback and Impact Evaluation
BISP maintains a comprehensive evaluation component of both the UCT and CCT initiatives that not only measure the wellbeing effects among beneficiaries but also inform the management that how these impacts vary across different socio-economic groups of beneficiaries, across regions and over time. In addition, these evaluation techniques also help to understand the key issues and bottlenecks so that program modification and redesigning could be done for effective targeting. These evaluations are also important for better transparency and accountability of the program. Currently, following two major impact evaluation studies are ongoing:
- Impact Evaluation
- Spot Checks and Beneficiary Feedback
Keeping in view the importance of impact evaluation, the Government of Pakistan has contracted Oxford Policy Management (OPM) to undertake a rigorous evaluation of the programme’s impact. Following are the key findings of the first follow-up report conducted by OPM:
- BISP is having an impact on increasing consumption expenditure and reducing poverty for households within the relevant RD treatment sub-sample. The evaluation indicates that per adult equivalent monthly consumption expenditure has induced a net increase for the RD treatment sub-sample of Rs. 318. Overall BISP causes a 22% point reduction in poverty for the RD treatment group
- BISP has induced a fall in the depth of poverty. It was found that BISP has reduced the poverty gap by 6 percentage points for the RD treatment group. This means that BISP has led to an improvement in the welfare of beneficiary households such that they are not only less likely to be under the poverty line, but also that those who remain in poverty are closer to the poverty line.
- BISP has reduced rates of malnutrition amongst girls (aged 0-59 months) as measured by wasting, a measure of short-term malnutrition.
- 64% of female beneficiaries report that they retain control over the cash transfer, in terms of how the transfer is spent. This result appears to hold regardless of whether the beneficiary actually collects the transfer herself.
- BISP has caused a change in the livelihood strategies adopted in beneficiary households. BISP has decreased the proportion of working aged men engaged in casual labour but increased the proportion of men who are self-employed. This indicates that BISP may be supporting the adoption of less vulnerable livelihood strategies.
- BISP reduces the proportion of boys who engage in child labour.
- BISP is associated with an increase in the reported expenditure on health, increasing per adult equivalent health expenditure by around Rs. 50.
- BISP has induced an increase in the propensity to save amongst beneficiary households in Khyber Pakhtunkhwa. The payment mechanism also presents an (untapped) potential to improve the financial access of beneficiary households.
Spot Checks and Beneficiary Feedback
The aim of spot checks and beneficiary feedback exercise is to determine progress on targeting, enrolment, payment mechanisms and grievance process, through quantitative and analytical methods, as well as enabling better assessment of programme performance and result in increased/enhanced accountability to beneficiary. The first round was conducted in 2014 by Mott MacDonald (MM) Limited and five reports have been prepared including Grievance Redress Report (GRR), Beneficiary Feedback Based on Focus Group Discussions and CDs, Beneficiary Feedback Based Household Survey, Spot Checks Report and Report on Non-Withdrawal Cases. The 2nd round is in progress. BISP is utilizing all these spot checks and feedback report to improve its design, field operation and course correction so that maximum benefits could be given to the beneficiaries at their door steps.
New Payment Model
BISP signed banking contracts with 6 banks on non competitive basis in 2012 for 18 months and since then has been extending the same on annual basis. On 3rd November 2015, BISP Board approved hiring of new payment agencies on open competitive basis and finalization of the new payment model on the basis of lessons learned and best global practices. Final “New Payment Model” was presented to the BISP Board in its 27th meeting held on 26.09.2016 and was duly approved by the Board. Concurrence of the model will now be obtained from Finance Division and subsequent to that, an RFP would be floated to hire new payment agencies under the new model.
BISP started disbursement to its beneficiaries through Pakistan Post using Money Order system in 2008. In 2010, BISP carried out a pilot with NADRA using Smart Card, in 2011 with Banks and Telecoms using Mobile Banking as payment channels. It moved to debit cards in 2012 and at present 94% of BISP beneficiary payments are made through Benazir Debit Card (BDC).
The architecture of the present payment model is as under:
Present system has the following weaknesses/shortcomings:
- Insufficient number of ATM’s/touch points all over the country, resulting in congestion on initial days of disbursement.
- Un personalized cards are subject to impersonation.
- Beneficiaries incapable of using instrument themselves lead to exploitation.
- Frequent complaints and service quality issues are faced w.r.t card issuance/re-issuance, pin issuance etc.
- Lack of clarity of obligations in present contracts.
- Current model is non-beneficiary centric.
- Virtual account benefit of un-withdrawn funds is to the bank (banking floats).
- Banks not proactive in serving beneficiaries.
- Majority of payments are disbursed through urban located ATM’s whereas majority beneficiaries are located in suburban/rural areas areas.
- Non debit card issuing banks do not facilitate withdrawals and create hurdles for the beneficiaries.
What is New in NEW PAYMENT MODEL?
Objective of the “New Payment Model” is to make payments efficiently and smoothly to BISP beneficiaries, with elimination of the deficiencies of the current system. The goal is to optimize the system of payments for the BISP beneficiaries by making it efficient, economical, user friendly and transparent by selection of payment agencies through open competition.
In order to meet the objectives of the “New Payment Model”, BISP developed the model in consultation with all stakeholders, external and internal, including Banking and Branchless Banking industry, Telecom Companies, 1 Link, NADRA and State Bank of Pakistan (SBP). Valuable feedback and comments from all stakeholders have been incorporated in the model.
The New Payment Model has various salient features, which help it function as smoothly as soon as possible. The new payment model allows for multiple withdrawal options, through biometrically enabled ATMs, branches, agents and even door step delivery. In addition to this there is fully integrated complaint management as well as online reconciliation and reporting. It also aims to incentivize banks to push payments to beneficiaries while bank commissions will be paid after payment delivery to beneficiaries. Furthermore the new payment model will eliminate banking floats, and introduce sliding scale commission instead. BISP’s centralized “BISP Payment Processing system” through which all biometric authentication requests will be routed which will enable online reconciliation of all payments. Thus all data related to withdrawals, claim settlements, service charges will be accessible online. This biometric authentication helps to ensure transparency. Additionally in order to ensure effective communication, payment partners will be required to offer one-time free of cost SIM to Beneficiaries.
The overall architecture for the new model for payments is shown in the diagram below:
The operational and technical process is as follows:
- Inclusion of beneficiary in payment list,
- Definition of entities in Payment system.
- Allocation of districts/regions to payment partner.
- Registration of Beneficiaries.
- Alternate Registration Process – Personalized Debit Card.
- Payment List generation.
- Disbursement of funds.
- Withdrawal of funds (biometric method).
- Withdrawal of funds (Card method).
- Submission of claims for service charges.
- Reconciliation & settlement of claims.
Perceived Wins of the NPM include; beneficiary centric personalized biometric payments with no impersonation, or loss of ATM pins. Secondly, financial inclusion through provision of level 0 accounts, branchless banking which include M wallets for all beneficiaries. And lastly, rural orientation enhanced payment touch points and engaging service providers for developing beneficiary centric financial products.
Some key embedded components of NPM include;
- Comprehensive, online Complaint Management System.
- Widespread Communication Strategy.
- Transition Strategy.
- Implementation and roll out.
Currently, the New Payment Model stands internally and externally reviewed and vetted, including by the development partners. The New Payment Model has been approved by BISP Board and after its final approval from Finance Division; proposals will be invited from the banking industry to become payment partner agencies of BISP for making payments to BISP beneficiaries. The New Payment Model will be piloted by March 2017 tranche and its national role out will be completed by December 2017.