Mumbai: A study published by the Indian state bank (SBI) said that business correspondents, which are channels for most Jan Dhan account transactions, is an excessive public sector bank (PSB) by routing transactions in a way that aims to maximize costs.
This report calls for changes in the norm for business correspondents to promote financial inclusion.
The business correspondent is connected to the banking system using a handheld device similar to a credit card friction machine.
These machines are capable of using aadhaar or debit biometric cards for authorization.
If business correspondents provide services to bank customers using the same bank application, the transaction is considered a ‘US’ transaction by the bank.
If the service is provided to customers using another bank application, the transaction becomes ‘off us’ for the bank where the customer holds their account and the bank finally pays an exchange fee.
The report, written by the SBI Group Economic Advisor, Soumya Kanti Ghosh, has asked the RBI to the business correspondents presented converting ‘in US transactions’ from public sector banks to ‘off us’ on the payment system activated aadhaar (aeps ).
) To get exchange fees and more commissions.
Business correspondents have taken the middle stage in rural acts after the 2017 New RBI branch authorization policy recognizes them as providing a minimum service of four hours a day for five days a week as a banking outlet.
Their number has increased from 34,000 in 2010 to 12.4 lakh in December 2020.
They have become the foundation for serving 43.7 Crore Jan Dhan accounts, 78% of them with public sector banks.
According to the report, the problem lies in the flexibility given to business correspondents regarding transaction interoperability, which allows them to play the system.
“We estimate that PSBS can pay Rs 600-700 Crore per year as an exchange fee.
This money can be used by PSB for further financial inclusion more holistic,” said Ghosh.
This report suggests that AEP must work like the Point-of-Sale (POS) terminal used by traders.
Converse with what is happening between business correspondents, in the bank post machine the acknowledge of paying costs to the issuing bank.
“Or, there may be rationalization in exchange fees because there is no field playing in the infrastructure provided by all banks,” the report said.