The Reserve Bank of India (RBI) has asked banks to compensate business correspondents adequately to make financial inclusion a success.
“Banks have to realise that for the Business Correspondent (BC) model to succeed the BCs, who are the first level of contact for customers, have to be compensated adequately, so that they too see this as a business opportunity,” RBI Deputy Governor K C Chakrabarty said at a banking technology summit in here on Tuesday.
In order to achieve greater financial inclusion, banks are allowed to use the services of trusts, companies, post offices, co-operative societies and, more recently, retired bank employees, ex-servicemen and retired government employees as BCs. Recently, State Bank of India had to offer higher compensation to one of its BCs after he demanded more fees for his services.
Chakrabarty also said the relationship between banks and the mobile service providers who work as BCs, is yet to stabilise. “Reports reaching us still suggest that the true spirit of co-operation is yet to stabilise, with each still trying to destabilise the other. The entire world is looking at this experiment in India and I would urge all of you to get your acts together.”
ONLINE REPORTING
Chakrabarty said the banks have not made significant progress on online reporting though the technology platform was launched three years before. “We are not happy with the (progress made in usage of the technology for) reporting part, we are trying to improve that.”
In 2008, RBI had launched the eXtensible Business Reporting Language (XBRL) standards, a technology which would enable banks to report online to the regulator without manual intervention. This was supposed to be the next step after installing a core banking solution (CBS) in banks. So far, some banks are still to achieve the first step. According to the trends and progress report of 2009-10, about 90 per cent of bank branches are under the CBS network.
Chakrabarty said public sector banks face a bigger challenge in terms of employing technology because of their sheer size, while foreign banks are better placed owing to the limited number of branches. “You require technology if you have a large network. Foreign banks do not face this problem because of a limited number of branches.”
RBI had said in its annual monetary and credit policy for 2011-12 that it was in touch with banks and solution providers for implementing the recommendations over two years. The project would be implemented in a phased manner depending upon the technology and process maturity of individual banks.
RBI had asked banks for a roadmap, clearly indicating the returns which can be sourced directly from the banks’ systems for submission to the central bank without manual intervention. It was also decided to prescribe a quarterly monitoring format in which banks could certify the list of returns internally generated from IT source systems without manual intervention.
On banks' financial inclusion efforts, Chakrabarty said they will need another four to five years to expand services to everyone in this country. He said banks should use technology to scale up usage of mobile banking. “There has been progress in mobile banking, but it is very insignificant if compared to the total population using mobile technology,” Chakrabarty said.
