HINDRANCES IN THE PATH OF BUSINESS
CORRESPONDENTS ENGAGED BY S.B.I.
GOVT.SCHEME TO EXTEND BANKING
FACILITY TO VILLAGES LIKELY TO FAIL
S.B.I. has engaged B.Cs. individuals recently by widespread advertisements in leading newspapers and displayed commission @ 0.5% on deposits and withdrawals, commission on fund transfer being @ 2.5%. On the basis of this, many entrants were engaged as B.C. (Individual) and a contract was entered into between B.Cs. and State Bank of India’s authorized competent authority wherein the above commission rate was mentioned.
After entering into the contract, the Bank has changed the structure of the commission which is too low, and it will result a heavy loss incurring expenditure from B.Cs’ own pocket, thus they will be compelled to shut down their outlets very shortly.
The SBI has instructed /mutually agreed upon with B.Cs., to setup the outlets under kiosk banking in designated village/rural area, with furniture wiz counter, tables, chairs, stool,, other seating arrangements, for customers, computer with speakers, web camera, printer etc. In rural area, electricity connection is a must, and it is feasible due to low cost in comparison to generator and therefore, an inverter with battery is also needed, because of frequent power cut in rural areas, in order to conduct uninterrupted banking service. Thus an investment of Rs. 200000+ has been made by B.Cs. No training has been imparted to B.Cs. as yet. Supplies of stationery viz. Account Opening form etc are insufficient.
As per banks norms deigned in this regard to open a Savings Bank account, the customers’ income should not exceed Rs.5000/- per month. A customer earning Rs. 5000/- per month, will hardly save Rs. 500/- or less per month. Thus, deposits to these account will be nominal, and commission earned by B.Cs on such average balances will also be negligible.
In the banks' eye, the BC model is a snatcher of their business / profit, while it is not so, because, ultimate business captured by B.Cs is that of banks business, only a very small amount will be paid to them in shape of commission. the terms and conditions to open an account in rural area under kiosk banking launched by SBI are such, which have bolted the hands and legs of B.Cs. who cannot move here and there. Examples:
a) Earning of customer should not exceed Rs. 5000/- p.m.
b) Total balance in account should not exceed Rs.50000/-.
c) Total of transactions amount should not exceed Rs.200000/- per annum.
d) Cheque Book in current account has not been allowed. In such circumstances, none will be interested to open current account under B.C. model.
e) The students studying in Junior High School, High School and Intermediate even in 1st year of graduation are not eligible to open a Savings Bank Account in this model, because the software does not allow it. Thus, we have been deprived of opening accounts students which are mainly for their scholarships and keeping some nominal balance in their account, saving out of pocket expenses received from their parents. The students’ accounts are just like no frills accounts, and they create hardship / load on Bank’s regular branches, which should be allowed to open under B;C. model, changing the so called software which does not allow to open an account below the age of 18 years, while as per extant banking law / practice, a person aged 10 years can open S.B. Account if he signs explicitly. This will ease the bank as well as the students residing near the kiosk banking Customer Service Points.
Generally, the Branch Managers of the CSPs link branches make abnormal delay to authorize to actual opening of accounts, ranging from 15 to 30 days, and try to harass the B.Cs and compel them to fulfill KYC norms as prevailing at regular branches, and not under liberalized KYC norms which is in vogue in B.C. Model.. Such delay creates confusion and doubt regarding the credibility of B.C. model in the minds of customers.
Provision of pass books has not been made under this model which also creates doubts in their minds. Provision of issuing pass books and its updating should be allowed so that a confidence and credibility may be developed amongst the public.
B.C. should have been linked to such a channel / Manager, who should be a person linked to Apex level, so that he can take necessary remedial action on the grievances of B.C, because most of the problems are due to policy matters which can only be solved at top level. The Bank’s officials at lower level viz. (RBO) Regional Business Office of the Bank, are not capable to tackle the things to a genuine remedy.
The Bank would have negatively fed to the R.B.I. that their expenses incurred on B.C. model were on very high side in comparison to the revenue received, while from above it is vivid that B.Cs. have created the infrastructure on their own and Bank did not expend a single penny for it.
All risks / losses will be suffered by Business Correspondents as per Bank’s agreement. Security arrangements and insurance of cash holding / cash in-transit is also that of B.C’s responsibility.
The structure of commission payable to B.C. reflects that the total income will be around Rs. 2000/- per month and the expenses incurred by them arrives at Rs. 15000/- p.m. Thus an amount of nearly Rs. 12000/- will be expended by B.Cs. every month causing a heavy loss to run the C.S.P. under kiosk banking system.
I opine that the Bank has negative view towards B.C. model and cooperate rarely, at the grass-root level. Hence, the scheme of Govt. of India and R.B.I. seems likely to be flopped due to Bank's negative approach. The SBI will try to prove that failure of this system (B.C. Model) is due to B.Cs incapability or deficiency.
The enhancement of banking services to be rendered at the kiosk banking CSP and commission payable to B.Cs. should be considered to achieve the goal.
