When the public is holding cash amounting to a whopping Rs 11,64,450 crore, shouldn’t banks try and convert a part of this money into deposits?
State Bank of India Chairman, Pratip Chaudhuri, distinctly sees such a possibility at a time when the banking system is facing liquidity tightness.
In order to tap currency in the hands of the public, India’s largest bank is installing cash deposit machines (CDMs) at marketplaces across the country.
Traders, shopkeepers and vegetable vendors can deposit cash into these CDMs anytime of the day (24x7) and 365 days of the year just by swiping their SBI ATM-cum-debit card.
The money gets instantly credited to their account and they get a receipt for their transaction.
Chaudhuri said, “Today bank branches close at 4 pm or 5 pm, whereas most of India’s retail trade happens in the evening. No matter how much you promote cards (credit and debit), 70-80 per cent of the trade is in cash, especially at the street-level shops. So, banks need to have the ability to set up cash deposit machines.”
The SBI chief cited the example of vegetable traders to buttress his point.
The vegetable markets open early in the morning. Whatever transaction happens between the vegetable traders and vendors, they settle it by 9 am. The traders go home as the bank branch opens only at 10 am.
Now, if the trader had a CDM close by, he could have deposited his earnings without waiting for the branch to open.
In the last one year, SBI has set up 2,000 CDMs across the country. The average cash collection per machine a day is Rs 4 lakh, said Chaudhuri. The bank plans to install 1,000 more machines this year.
Even if 10 per cent of the Rs 11,64,450-crore currency with public as on September 6 comes into the banking system through the CDM route, it will augment banks resources, thereby benefiting the country, said the SBI chief.
Money transfer
SBI’s CDMs can also be used to transfer money with the help of a remittance card. A cardholder can swipe the card at the bank’s counter or in CDMs and remit money to the beneficiary whose account number is mapped to the card.
Once the transaction is complete, both the remitter and the beneficiary get confirmation through SMS on their mobile phones.
The remittance card was introduced last year to cater to the large number of non-home cash deposit transactions at SBI’s branches. Meanwhile, to attract more deposits, SBI will soon roll out a family health insurance plan for its depositors. The bank is already offering accident insurance cover to its depositors on payment of a small premium.