The Hindu Business Line : State Bank launches `no frills' account for villagers

The scheme, which will be launched on Thursday, will enable villagers to start a bank account with deposit amount as low as Rs 50. Christened `SBI Tiny', the account can be maintained with zero balance.

The pilot project is being launched in Bahirgaon village in Aurangabad district.

Mr Ashok Kini, Managing Director, will open the first `Tiny' account. To begin with, SBI will offer the scheme in rural branches and may later extend it to other areas over a period of time. SBI has over 4,000 rural branches across the country.

This deposit scheme will be available to all daily wage earners or those with monthly income below Rs 5,000. It will carry interest as applicable to savings accounts, which is currently 3.5 per cent.

However, the interest will be payable only if the minimum balance in the account is Rs 500 or more during a month. No service charge is applicable on such accounts in case the balance is below Rs 500. These accounts will not have cheque facility and a maximum of four withdrawals would be allowed per month.

The bank may, at a later date, consider ATM cards based on biometric access, depending on the business volumes. The scheme follows the Reserve Bank of India's directive to extend banking facilities to the poor.

An official from the bank said, "The aim behind Tiny is to provide value proposition in rural areas. It is of no monetary benefit to us. It is to involve the rural people in the banking system."

In urban and metro areas, the bank already offers a `no frills' account. SBI plans to enlist the help of local residents and people who are part of self help groups (SHGs) or NGOs to promote Tiny.

Called SBI Mitras, these people will assist the target group to open accounts with the bank's branches and other activities such as updating passbooks, accepting deposits, etc.

SBI Mitras will be engaged by the local branch manager with the help of the SHGs and NGOs. These Mitras could be retired teachers or Government employees, or women without full-time employment with minimum educational qualification.

In case of accepting deposits, SBI Mitras would accept cash deposit in a collection box put up by the bank at their places. "The key would remain with the bank. This will take care of the safety part," the official said.

The bank proposes to offer incentives to the Mitras such as an honorarium of Rs 2 per account for opening accounts, Rs 0.5 per active account per month for providing support, and loans at concessional rate in consultation with the branch manager.

"We are extending the same concept as we follow with the SHGs. However, this is not finalised yet," the official said.

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