Encouraged by the success of a pilot to implement the smart card-based electronic benefit transfer (EBT) system on “one district, many banks” model in three districts of the state, Karnataka has shown interest in implementing the scheme in another three districts on a “one district, one bank” model.
This follows the recent proposal by the Reserve Bank of India (RBI) to hasten the pace of adoption of smart card-based EBT system by banks for routing payments of social security benefits, wages under Mahatma Gandhi Rural Employment Guarantee Scheme (MGREGS) and payment in other government schemes. The RBI has also mooted an incentive scheme to speed up the implementation.
The identified districts are Chamarajanagar, Mandya and Dharwad, while the implementing banks will be the State Bank of Mysore, Vijaya Bank and Axis Bank respectively. Axis Bank was chosen to implement the scheme in Dharwad district, based on its experience in implementing the same project in Andhra Pradesh.
Basant Seth, chairman and managing director, Syndicate Bank and chairman of State Level Bankers Committee (SLBC) has advised all the participating banks in the pilot districts to take immediate action in starting enrolment of job cardholders under MGREGS and social security pension beneficiaries as per the data made available by the government.
The participating banks have been asked to ensure completion of enrolment process before the proposed international convention on financial inclusion and financial literacy scheduled to be held during mid March 2010, so that a road map can be prepared for extending the EBT scheme to the remaining parts of the state.
The scheme provides for reimbursement of Rs 50 per account for opening accounts with bio-metric access for routing the aforesaid payments subject to the state governments agreeing to pay the transacting banks, the transaction fee mutually arrived at between the banks and the state government. While, the RBI had recommended 2 per cent of the value of the payments effected through these accounts, the Karnataka government has agreed to pay a fee of 1.5 per cent.
Following the directions issued by RBI governor D Subba Rao during his interaction with the state government officials in May this year, a working group held its meeting on June 17 under the chairmanship o state finance secretary and agreed to suitably amend the memorandum signed between the lead banks and the government for implementing the EBT system.
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It was decided to simultaneously implement both the models like one district, many banks and one district, one bank and adopt best of the two for extending the scheme to the rest of the state.
A technical group comprising 8 members, four each from state government and participating banks, is constituted to work out the specifications to implement the project.