Bank of Baroda in talks with state for RTO tax collection

The vehicle owner will soon get relief from the long queues in front of the RTO offices as the public sector bank, Bank of Baroda (BOB) would take up the job of collecting the road transport tax (also know as RTO tax).

The bank is aiming at securing the job of collecting the road transport tax from the Gujarat government that would further increase the revenue it generates through government business.

Talking to Business Standard, G G Joshi, general manager, BOB, Gujarat, said, "We are almost near securing an agreement with the state government for collection of road transport tax in Gujarat."

The bank has set its eyes on the Rs 14,000 crore the road transport tax collection of the Gujarat government. As there are many other agencies for collecting the road transport tax for the state government, the bank expects to corner approximately one third of the Rs 14,000 crore of the road transport tax collected by the state government.

The road transport tax collected would be passed on to the state government and in return the bank would earn a commission for the service that it would provide to its customers.

Joshi informed that for the financial year-ended March 2007, the bank has generated huge revenues from the government business.

For the bank, the government business consists of the collection of taxes on behalf of the state or Centre like sales tax, pensions, treasury, customs, excise, RBI bonds, indirect taxes and PPF. For financial year 2006-07, the turnover from government business stood at Rs 24,000 crore and the bank earned income from commissions of Rs 16 crore.

The bank believes that after it secures the job of collecting road transport tax from the state government, it would help in increasing the revenues generated through government business.

"We expect to touch a government business turnover of Rs 35,000 crore for FY 2007-08 and aims to achieve a commission income of Rs 25 crore," said Joshi.

Nowadays, most banks are focussing on increasing its income through non-interest income. Service-based income or commission-based income had been gaining ground amongst bankers to push up their revenue.

Providing service like tax collection, sales of life insurance products, mutual funds and such other products, enabling the banks to provide value-added service to its customers, along with the increase in its revenue through non-interest income.

The state government had given in-principal clearance to BOB and SBI for collecting road transport tax. "Our bank has been short-listed by the government along with the SBI for the road transport tax collection," says Joshi.

The bank expects that the decision by the state government will be soon taken, once the y solve the operation level issues at its own end. There will be various centers for the collection of road transport tax from the vehicle owners. However, it would be physical submission of road transport tax, as some segment of the vehicle owner are not internet savvy. "

Certain segments of vehicle owners like the truck divers among others are not much into the internet usage, thereby the collection would be in physical form," informs Joshi.

According to BOB, the concept of doing government business has undergone a sea change. The government has become a major customer for the banks in today's banking scenario.

The recently-launched e-payment of customs duty for its customers. The corporate customer with the bank would have an easy assess for submitting its custom duty, using BOB's facility.

The bank will also undertake expansion of its branches in the northern part of the state.

The bank has relatively lesser number of branches in north Gujarat as it has a strong presence in south Gujarat. "We will be adding 15 more branches in north Gujarat," informs Joshi.