Comments
The Finance Ministry’s proposal that fair price shops (FPS) should be engaged as business correspondents (BCs) across the country has not enthused public sector banks.
Bankers fear that if the proposal becomes a reality, it will be detrimental to the viability of existing BCs, which have been providing banking services in rural areas on behalf of banks for many years.
The discretion to take a call on the individual/entity they can engage as a BC should be left to the banks, said a senior Bank of India official, adding that engaging FPS as BCs should not be made mandatory.
Banks are already reaching their services to the vast hinterland via banking outlets opened through BCs and don’t want this arrangement disturbed, the banker quoted above said.
BCs are intermediaries engaged by banks to provide banking services such as collection of small-value deposits, receipt and delivery of small-value remittances/other payment instruments, disbursal of small-value credit, and recovery of principal/collection of interest.
The BC model allows banks to do ‘cash in-cash out’ transactions at a location much closer to the rural population, thus addressing the problemsof last mile reach.
Reserve Bank of India data show that 69,589 villages with population of over 2,000 have banking outlets opened through BCs. Further, 4,16,636 villages with population of less than 2,000 have outlets opened through BCs.
A senior public sector bank official said: “While fair price shops do come under the category of eligible entities which can be engaged as BCs, engaging them now, at a time when many villages are already being provided banking services through existing BCs, may not be a good idea as business will get fragmented. Existing BCs may suffer as a result.”
Alluding to reports that some FPS have been either denying existing customers their full quota of commodities, such as rice, wheat, and sugar or supplying sub-par foodstuff to the common man, the official said banks will be mindful of such sharp practices creeping into banking services when engaging FPS as BCs. There are over five lakh FPS across the country.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.