State Bank of India will be the biggest beneficiary.
Commissions earned by banks on government business are likely to rise with the Reserve Bank of India setting up a committee to review the existing payment structure.
The structure is generally reviewed every five years. It was last revised in 2005. RBI has formed a committee under A M Pedgaonkar for the review.
Banks receive Rs 60 per transaction in case of pension payments. For other payments, they get nine paise for every Rs 100. For receipts, they get Rs 45 per transaction.
Bankers have made a case for increasing the commission to 15 paise per Rs 100 for payments other than pension and to Rs 100 per transaction in case of pension.
The country’s largest lender, State Bank of India (SBI), has the major share in government business. As on March 31, SBI handled 58.8 per cent of the central government’s aggregate payments and receipts and 65.1 per cent of the state governments’ aggregate payments and receipts.
More than 7,000 branches of SBI conduct government business.
In recent months, the bank has been trying to further strengthen its grip by targeting business from defence and para-military forces.
“The volumes of government business are going up with increasing budget allocation. In addition, banks are penalised for even minor delays,” said an official at a state-run bank, while arguing for the hike in commission.
Recently, the central bank asked state governments not to engage private sector banks. The wide network of state-run banks, especially in rural and semi urban areas, was seen as an effective means to carry out government transactions.
