Union Budget 2018 is just around the corner and experts from across the banking and financial industry are highlighting several crucial issues that should be included in the upcoming major announcement.
In alignment to this, Abhishek Pandit, Director-Business Services, AISECT shares his expectation from the Union Finance Minister Arun Jaitley with regards to the allocation for Financial Inclusion in the upcoming Union Budget 2018-19:
The Business Correspondent (BC) Channel has showcased immense potential and success over the last few years. Therefore, it would be a major boost for the channel if the Finance Minister allocates an increased budget for this segment in the upcoming Budget. The Government should focus on effectivising BCs towards digitalising customers by waving off GST from their transactional commission. Moreover, an App-based operating system should be proposed for BCs wherein they can carry their operations without the hassle of operating full-time on desktops. Possibly, a revised version of BHIM, wherein consumers and BCs operate on a single platform, could be a great push for the Government’s dream of digitalising the rural economy.
Allied services like providing credits, insurance, pensions and managing provident funds should be added to the scope of work of the BCs. Moreover, with its proven excellent track record in comparison to the Common Service Centres and the widespread credibility it has in the rural population, the Business Correspondent should become a single platform for offering financial as well as e-governance services in his region. Such a policy would help us in creating a long-demanded ‘single convergence point’ for all banking and e-Governance services, reducing manpower and capital consumption significantly.
In the Union Budget 2018-19, the Finance Minister should announce an extension of the Jana Dhan Yojana, which is slated to end in August this year. Figures illustrate the scheme’s success in terms of serving the unserved; now is not the right time to halt the project. In fact it should be further revamped by scrapping transaction charges on Jan Dhan accounts, and by increasing the overdraft facility from Rs 5,000 to at Rs 10,000.
Financial literacy should be another key focus area in the Union Budget 2018-19. With a large number of citizens getting bank accounts for the first time, it is important that they learn how to maintain one. Though banks and institutions like NABARD have their own financial literacy programmes, financial literacy should be pushed through the Business Correspondent (BC) channel in rural India. Interoperability should also be pushed within the rural system along with Aadhaar enabled payments wherein people can use a banking kiosk of any bank for transactions even if they are customers of some other bank.
Please note that AISECT is India’s leading Social Enterprise functioning in the Financial Inclusion space since 2009 with an objective of providing financial and banking services to the semi-urban and rural population of the country.
Following are the key points related to AISECT’s operations in financial inclusion:
- AISECT is working as a National Business Correspondent for three nationalised banks, namely the State Bank of India, the Bank of Baroda and the Bank of India, as well as two Regional Rural Banks (RRBs) i.e. the Punjab Gramin Bank and the Madhyanchal Gramin Bank.
- Till date, AISECT has set up 4,000 banking kiosks in 13 states.
- Over 85 lakh bank accounts have been opened so far in these banking kiosks.
- More than Rs 800 crore has been deposited in the accounts and transactions worth over Rs 4000 crore have been done in these accounts.
- On an average, Rs 850 have been deposited in each account.
- Each banking kiosk earns a commission of about Rs 10,000 per month.
- AISECT has also initiated mobile ATM services in partnership with SBI.
- Apart from account opening and deposits, the AISECT banking kiosks offer a host of services under Government schemes such as the Pradhan Mantri Suraksha Bima Yojana, the Pradhan Mantri Jeevan Jyoti Bima Yojana, the Atal Pension Yojana, etc.
- Under the Mudra Yojana, loan sourcing is done through the AISECT kiosks.
- 1,000 AISECT kiosks currently work as the Debt Recovery Agents of banks.
- The organisation is also conducting financial literacy programmes in Madhya Pradesh and Chhattisgarh for rural adults, especially women, as per its partnership with National Bank for Agriculture and Rural Development (NABARD).
- AISECT’s key responsibilities as a Business Correspondent include customer acquisition and service delivery, customer authentication and cash handling (deposit, withdrawal and remittance), customer enrolment, including collection of biometric and other details, providing cards (ID Card, Debit Card, Credit Card), PIN, balance enquiry, issue of receipts/ account statement, disbursal of credit facilities, collection and prima facie scrutiny of loan applications including verification of primary data and facilitating the repayment of dues owed to the bank by its customers/guarantors.