Common service centres (CSC), gram panchayats, soochna kendras (information centres) and such government structures are to now double as branches of government banks in rural areas.
To help banks meet their financial inclusion targets, the finance ministry has allowed them to use existing infrastructure of government departments such as panchayati Raj, rural development and information technology.
So, instead of investing in opening new branches in remote areas, state-run lenders can extend banking facilities to customers through such centres.
“There are already three kinds of activities in villages. What we are trying to do is converge with them. Some activities are happening from the panchayat department, some from the rural development department, some from the information technology department. What we are saying is that wherever there are such centres, banks should converge with that,” said a finance ministry official
Taking it a step further, the ministry wants to make available all kinds of financial products, including insurance, at such centres. Banking correspondents have already started working from common service centres, which provide internet facilities in rural areas. Representatives of banks will also visit these centres at regular intervals to perform banking transactions for their customers.
“Let my branch and banking correspondent sit in that, rather than creating a separate structure. Why do you want to reinvest? They have a V-Sat, use that out,” said the official.
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Most of these villages have a population of at least 2,000. While banks may have to pay some fee to these centres for using their infrastructure, they are still likely to benefit.
Building a new branch would entail higher costs, especially in villages where the volume of transactions does not keep pace. The ministry wants to extend the model for providing banking facilities in villages with lesser population.
The CSC Scheme is being implemented in a public-private partnership framework.
As on June 30, 2011, about 95,000 CSCs had been set up across the country. CSCs are equipped with hardware (computer, printer, camera), power back-up and internet, making these a cost-effective banking correspondent outlet.
After covering 73,000 habitations by March 2012 through a financial inclusion programme, Swabhimaan, banks are being asked by the finance ministry to extend these activities to habitations with a population of at least 1,000 in northeastern and hilly states and to other habitations with a population of at least 2,000.