Kochi Metro Rail Limited has instituted a Public Private Partnership (PPP) project with Axis Bank Ltd., which has the capability to become a global model for Public Private Partnerships in the urban infrastructure sector. The Agreement signed between the MD of KMRL, Shri. Elias George and the MD & CEO of Axis Bank, Smt. Shikha Sharma in the presence of the Hon’ble Minister of Urban Development, Shri. Venkaiah Naidu today, stipulates that the investment of the entire funding required for the Automated Fare Collection system for Kochi Metro, will be undertaken by Axis Bank. In addition, Axis Bank will also pay an additional royalty of Rs.209 crore over the next 10 years for the right to be KMRL’s partner in this endeavour. Shri. Madhusudan Prasad, Chairman KMRL & Secretary, URBAN Development also attended the function with officials of KMRL, Axis Bank , EY and other partners of this project.
The responsibility of investing capital expenditure upfront will now be transferred from KMRL to Axis Bank, and in return, Axis Bank will get the rights to issue co-branded cards, which will function as a Smart Card as well as a ticket on the Kochi Metro Rail system. This innovative business model of KMRL is expected to transform funding models for such infrastructure in the metro industry globally. The entire maintenance of the AFC system for 10 years will be undertaken by Axis Bank. The bank will issue co-branded cards to the users of the Kochi Metro system. In addition to this, 0.2% of Axis Bank’s gross revenues, from the utilization of this Card outside KMRL’s ecosystem in various mercantile outlets and internet transactions, will also accrue to KMRL over the next 10 years.
Axis Bank is partnering with Asis electronik Ve Bilisim Sistemleri, A.S, a Turkish company for the AFC infrastructure and AGS transact Technologies Limited for the integration and maintenance in this endeavor. The Automated Fare Collection (AFC) system is a critical core component of any Metro system, which includes complex hardware and software installed at entry points of Metro stations as well as the buses and boats. This system uses Radio Frequency Identification Devices (RFID) to collect fares from the users of the urban transportation systems. In such a system, the Metro ticket can be in the form of a co-branded Card or a NFC enabled Smart-phone or a `patch’ on a mobile device or any other surface with NFC stickers or QR code, or even as a paper-coupon.
A significant part of the investment on the Systems side of the Kochi Metro Rail system is for the provision of such a comprehensive AFC. The normal practice in metros worldwide is for the metro company to invest their own funds into the capital expenditure. However KMRL decided to go in for a completely different paradigm, where we had invited competitive bids from various Indian banks to invest the entire capital expenditure on the AFC system, in return for their right to use co-branded cards and co-branded software on our Metro system, which will function both as a Smart Card of the Bank as well as a ticket for entry into the Metro system.
“This Bank investment model has great advantages for the citizens of Kochi because the common man who uses the Metro system will have the opportunity to obtain a co-branded card, which can not only be used for transportation requirements, but also for other mercantile and internet transactions. This Smart Card can be linked with any bank account of the user, in any Bank, including the Jan-Dhan Yojana”, Said, Elias George, MD, KMRL.
Speaking at the occasion, Ms Shikha Sharma, MD & CEO of Axis Bank, said “Creating a payment infrastructure that supports cashless payments is an integral part of growth of smart cities in the country. The various initiatives of Axis Bank in the Toll & Transit payments, including this association with KMRL, are steps to enable this common vision.”
KMRL is also planning a `click and collect’ system whereby the commuter on the Metro system will be able to order goods and services using this card which can be delivered at our Metro stations. The user of this card will also have the satisfaction that 0.2% of the Bank’s share of the revenues from each and every transaction is being plowed back into the city by way of the Bank’s revenues to KMRL. KMRL is also planning to start a drive for including a variety of local and national goods and services that can be accessed using this KMRL-Axis Bank co-branded Card. This is also for the first time that the AFC solution has been enabled on the `Cloud’ based hardware in line with KMRL’s IT philosophy of `open standards on the Cloud’. In addition to the co-branded Card, the Bank will also develop a Mobile `App’, which can be used for ticketing as well as `e-commerce’. The benefits to KMRL from this new model are obvious – huge savings in capital investment, additional royalty of Rs.209 crore that will be paid by Axis Bank, as well as 0.2% of the Bank’s revenues on each commercial transaction using the card over the next 10 years.
Axis Bank’s advantage in this model is that they will have a unique opportunity to populate their Card in the Metro ecosystem and in Kochi city, with a net addition of new clientele, as well as the `first mover’ advantage in this new endeavour, which can be replicated in other cities in India and abroad. In other words, Axis Bank has invested in this vision of KMRL where the common Metro user will have a unique co-branded Card, which can be put to a variety of other uses apart from ticketing. This initiative is also unique in that it is for the first time that `open-loop’ smart cards are being introduced in the Metro system. MoUD has mandated all metros to have an integrated smart card system, which can be used in all transit. KMRL is the first metro in India to take a bold step in this direction. To achieve this goal, KMRL had appointed Ms. Ernst & Young as consultants for drawing the specification for an appropriate smart card system.