Taking corrective measures to give two of its ambitious schemes – direct benefit transfer and financial inclusion – an extra push, the Narendra Modi government plans to have at least 20 lakh points of service (POS) across the country’s six lakh villages by roping in ration shops, gramin dak sevaks and common service centres. The government aims to do this by early next year.
“The idea is to provide at least four to five options for POS machines for banking in every village by next year to supplement the reach of bank branches and banking correspondents. A POS can easily be used to withdraw and deposit funds and pay pensions, scholarships and cash transfers,” said a senior official involved in the exercise.
This is expected to help bring basic banking services at the doorstep and improve access to formal financial channels in most of the far flung and unbanked areas of the country, an issue which was being voiced as a key hurdle for implementing these schemes, the official explained. Till now, the government was depending on banking correspondents and local branches.
According to the plan being finalised, POS machines installed at fair price shops and common service centres of the Department of Electronics and Information Technology, along with core banking services at post offices, will be used as a means to provide financial access. While all fair price shops (FPS) in the country will have POS by December 2016, core banking solutions in post offices will also allow
“All these systems will be put in place by early 2017 and gradually, payments banks will also come into existence. This will help improve cash transfers and financial inclusion efforts,” said the official.
The decision was taken after sub-service area mappings of households across the country to understand their access to formal banking channels.
Government officials pointed out that there are about 43,000 bank branches in the country and about 1.5 lakh banking correspondents. However, despite 20 crore bank accounts opened under the Pradhan Mantri jan Dhan Yojana, access to banking channels remains a challenge for many account holders as brick-and-mortar bank branches may be far off and not all banking correspondents are active.
Official data indicate that as against 1,11,182 active bank mitras or banking correspondents in the country, a total of 1,26,774 are required. Further, 785 sub-service areas in rural sectors were also uncovered due to lack of banking correspondents and bank branches.
In fact, the Chief Economic Advisor Arvind Subramanian believes that DBT should and is being re-vitalised. “It should be part of the longer term agenda of the government on how we run the economy.” According to him a significant consideration in the whole process will be the role of local distribution centres.For example, in Krishna district in Andhra Pradesh, they have using biometrics for direct benefits, but physical delivery through FPS.
On a cautious note he said, if financial inclusion is not widespread and poor people do not have bank accounts, “then we have to see how to modify the DBT strategy without getting de-duplication and also without in any way failing to meet the objectives to provide cheap food to all the BPL households.”
Voicing a similar concern is the NITI Aayog, which feels that urban and semi-urban areas should not be the deciding factor for the success of the scheme. “How the supply side and distribution is managed in the rural centres will decide how successfully the schemes have spread across the country,” a member said.