Table Agenda 132nd SLBC
1. Common RFP for selection of Business Correspondent
As directed by Ministry of Finance, Government of India, Indian Overseas Bank as leader bank floated common RFP on 07.05.2012 for engaging Business Correspondents for the cluster comprising Tamil Nadu, Kerala and Puducherry. M/s.FINO Fintech Foundation had emerged as successful Bidder by quoting 0.46 % of Cash Handling Fee.
A committee called “Oversight& Implementation Group” was formed under the leadership of State Bank of India. As suggested by them some issues were taken up with M/s.FINO Fintech Foundation for smooth and effective implementation of FI projects.
Secretary (FS), MOF in the bankers’ meeting held on 06.10.2012 advised the Leader Banks to obtain concurrence of selected BCs beforehand on the following issues before execution of BC Agreement with a view to addressing the issues such as de-risking of BCAs and reputational risk of Banks.
a. Collection of interest free deposits is not permitted
b. Collection of non-refundable deposits is not permitted
c. Hand Held Device should be owned by the BC
d. BC should not, in any way, convey to the BCA that they can hope to get jobs with the banks.
e. Banks will vet the agreement between BC and BCA.
M/s. FINO Fintech Foundation, the common BC of our cluster has not given their concurrence on the above issues.
The Oversight and Implementation Group forwarded a draft letter to be addressed to the BC by Leader Bank containing the terms and conditions to be incorporated in the BC Agreement. Leader Bank (IOB) had sent the letter to M/s. FINO Fintech Foundation on 03.11.2012 in line with the above draft letter.
M/s. FINO Fintech Foundation had not agreed to most of the terms and conditions, but put forth their own terms and conditions for implementing the FI project. In the meeting of Member Banks and BCs held by Joint Secretary on 20.11.2012 it was decided to obtain unambiguous consent of the BC to the terms and conditions before 30th November 2012.Accordingly Leader Bank had sent a Letter on 24.11.2012 to M/s.FINO Fintech Foundation for which they sought more time for getting approval from their Board.
Meanwhile, as advised by the Oversight and Implementation group, a meeting of select cluster leaders having M/s. FINO Fintech Foundation as BC was held on 14.12.2012. It was decided in that meeting that cluster leaders should convey their final views to Bank of Baroda by 20.12.2012. In this regard, a Bankers’ Committee meeting was held on 20.12.2012 to examine the matter.
Meanwhile the following difficulties are encountered in the process:
a ) The decision of the Union Government to commence Direct Cash Transfer from 01.01.2013 has created an abrupt and emergent need for extending banking facilities through available channel without waiting any longer for the common BC to commence operations.
b) Under directions from the Ministry of Finance, Government of India, all banks have executed MOU with M/s. CSC eGovernace Services India Ltd accepting them as the common BCs in all clusters where CSCs are setup. This is overlapping with the envisaged function of the RFP based common BC.
c) Several existing BCs and TSPs have ceased functioning or stopped taking interest in their work as there is uncertainty about their continuance after engagement of RFP based BC.
d) Apprehensions are raised in Tamil Nadu about doorstep delivery of Old Age Pension when the RFP based BC is engaged; as this is not a condition in RFP.
Table Agenda 132nd SLBC
2. Non submission of LBR-2 or LBR U-2 by banks to respective LDMs
SLBC has been advised by many Lead District Managers that the district co-ordinators of the member banks are not submitting LBR-2 or LBR U-2 to their respective Lead Bank Office for several months which results in serious hardship for the LDMs to submit the data to SLBC.
As an example we furnish below the list of defaulting banks in Thoothukudi district who have not submitted even a single LBR 2/LBR U-2 in the current financial year.
Bank Name / No. of branchesCanara Bank / 16
Indian Bank / 10
Union Bank of India & UCO bank / Each 3
Andhra Bank, HDFC Bank, Bank of Maharastra, Syndicate Bank, Karur Vysya Bank & City Union Bank, / Each 2
Oriental Bank of Commerce, Punjab National Bank, Catholic Syrian Bank, Vijaya Bank, South Indian Bank & Dena Bank / Each 1
SLBC received such letters from LDMs of many districts and also from some of the District Collectors. It is quite disheartening to note that some banks have not submitted the very vital return even once during the current year 2012-13. This is a very serious issue as SLBC depends entirely on the data received from the LDMs for conducting the quarterly meetings and to review various schemes which are implemented in the State and for submission of various statements to RBI, NABARD and Ministry of Finance.
Undoubtedly non submission of data will definitely result in wrong reporting, which will show a very poor performance level for the district / banks despite the fact that banks may have performed very well under Annual Credit Plan. We advise the member banks to take serious note of this situation and instruct all their District Co-ordinators suitably to submit LBR-2, LBR-U 2 and all other required data to LDMs in time to avoid such complaints in future.
The Lead District Managers are advised to confirm to SLBC that they have received the data from all the banks in the district before submission of district consolidation to SLBC. The LDMs are also advised to submit the list of defaulting banks to SLBC immediately after the deadline by email ( and ) or by FAX 044-2841 8030 to enable SLBC to escalate the issue with the controlling offices of the defaulting banks and also with RBI and Ministry of Finance.
The forum may deliberate on this issue.
Table Agenda 132nd SLBC
3. Mapping of Gram Panchayats and Planning for BCA/CSCs for Direct Cash
Transfer – Sub Service Area Approach
Ministry of Finance vide their letter dated 20.12.2012 has advised the SLBC Convenors of 43 districts to implement the direct cash transfer in the bank account of the beneficiary under various programmes w.e.f January 2013 and in the rest of the country in a phased manner.
In order to cover of the entire country with banking services to enable Direct Cash Transfer they have advised the detailed guidelines on Mapping of Gram Panchayats and Planning for engagement of BCA/CSCs (Common Service Centres) for Direct Cash Transfer – Sub Service Area Approach.
Ministry of Finance has advised to ensure that the Gram Panchayat(s) to be covered by each bank branch /BCA is clearly identified as a sub service area within the service area of the branch. They have advised to form sub-service area, based on the group of Panchayats, taking the population about 1,000 to 1,500 households and geographical conditions into consideration such that one Branch/BCA/CSC extends service to each sub-service area. In case any Panchayat requires more than one BCA/CSC, the sub-service area for each BCA/CSC, within the Gram Panchayat must be specified.
Ministry of Finance advised the following time line for Mapping of Gram Panchayat(s) and BCA/CSC in their service area, and assignment of sub-service areas for pilot districts and remaining districts.
For Tamil Nadu
1. Banks: Mapping of Gram Panchayat(s) and BCA/CSC in their service area, and assignment of sub-service areas by 15.01.2012 and submit to respective district LDM.
2. LDMs: Consolidation of the information for the district by 20.01.2013 and submit to SLBC Convenor.
3. SLBC: Consolidate the information for the state by 25.01.2013 and submit to Ministry of Finance
This exercise should clearly indicate the sub-service area, number of sub-service areas covered by the existing BCAs, to be covered by existing functional CSCs and sub-service areas which remain to be covered by BCA/ CSCs. SLBC already sent a detailed letter to all member banks and LDMs on 21.12.2012 along with a copy of the guidelines received from Ministry of Finance.
Member banks in Tamil Nadu are advised to complete the mapping of Gram Panchayat(s) and BCA / CSC in your service area and assignment of sub service area on or before 15.01.2013 and consolidate the report of your bank district wise and submit the report to the concerned Lead District Manager.
Lead District Managers in Tamil Nadu are advised to consolidate and send the report collected from banks in your district on or before 20.01.2013 to enable SLBC for onward submission to Ministry of Finance.
A copy of the Ministry of Finance letter along with format for collecting the information for the district from the Branch Managers by LDMs is enclosed for your use.
F.No. 6/36/2012-FI
Government of India
Ministry of Finance
Department of Financial Services
***********
3rd Floor, Jeevan Deep Building,
SansadMarg, New Delhi,
Dated the 20th December, 2012
To
1. CMDs of all Public Sector Banks,
2. Chairman of all RRBs (through sponsor Banks) ,
3. All SLBC Convenors
Sub: Mapping of Gram Panchayats and Planning for BCA/CSCs for Direct Cash Transfer – Sub Service Area Approach – Regarding
Sir/ Madam,
Under the Financial Inclusion Programme ‘Swabhiman’, Banks had provided banking services in over 74,000 habitations of 2,000 and above population. This, inter alia, included established Business Correspondents in such villages. This is being extended to habitations of 1,000 and above population in North-East and Hilly States and 1,600 and above population in the rest of the country this year.
2. However, with the announcement of Direct Cash Transfer in 43 Districts w.e.f. January, 2013 and in the rest of the country in a phased manner, it has become necessary that comprehensive plan for coverage of the entire country through banking services to enable Direct Cash Transfer is prepared.
3. The following guidelines are issued in this regard:
(i) It shall be the endeavor to ensure that there is at least one bank branch/ Business Correspondent Agent (BCA) in every Gram Panchayat(s). Since the population of Gram Panchayat varies across the States, Banks need to ensure that about 1,000 to 1,500 households are available in the sub-service area of BCA. In case of North-East, Hilly States and sparsely populated regions of other States banks may decide the households to be covered by each BCA appropriately. In case of larger Gram Panchayats more than one BCA could be appointed. In case of smaller Gram Panchayats more than one contiguous Gram Panchayat, taking into consideration the geographical area, could be assigned to each BCA. In every case, it should be ensured that the Gram Panchayat(s) to be covered by each bank branch/ BCA is clearly identified as a sub-service area within the service area of the branch.
(ii) Banks had earlier carried out an exercise of preparing Service Area Plans in which bank branch/ BCA to service each Gram Panchayat(s) was indicated. This should be immediately revisited by every bank for all Gram Panchayats in its service area keeping (i) above in mind.
(iii) The first step in this exercise would be to form sub-service area, based on the group of Panchayats as at 3(i) above, taking the population and geographical conditions into consideration such that one Branch/BCA/CSC extends service to each sub-service area. In case any Panchayat requires more than one BCA/CSC, the sub-service area for each BCA/CSC, within the Gram Panchayat must be specified.
(iv) Wherever the existing BCA is functioning satisfactorily, the same should be continued and remaining households in the allocated sub-service areas should be covered through the BCA. Considering the larger benefits of the kiosk banking model, it should be endeavoured to, in a phased manner, migrate the BCAs to kiosk banking system.
(v) In case the existing BCA is stationed at a place other than Gram Panchayat headquarters, there should be no need to change its location. It should, however, be ensured that the BCA serves the entire sub-service area allocated to it.
(vi) Wherever there is either no BCA functioning or the performance of the existing BCA is less than satisfactory, the Common Service Centre, set up under aegis of the Department of Electronics and Information Technology, Government of India, under the National e-Governance Programme, should be engaged as BCA. It may be located at a place other than the Financial Inclusion village in the same sub-service area. All PSBs have already signed an agreement with M/s CSC e-Governance Service India Ltd., for engaging CSCs as BCA. Immediate action for assigning code and making the CSCs functional should be taken. Till such time the banks install the software and complete other technical requirements for cash transactions, the CSC should be used for activities other than cash withdrawal transactions. They should, in particular, be used for opening new accounts of beneficiaries under the scheme for Direct Cash Transfer. All Banks must ensure expeditious issuance of KO code for the CSCs which are identified for appointment as BCAs. CSC Services India Ltd. would ensure that the required information is furnished to the banks and that all CSCs are ready in terms of equipments, connectivity, biometric device, card reader and printer latest by 31.12.2012.
(vii) In the sub-service area where neither a BCA nor a functional CSC is available, the M/s CSC e-Governance Services India Ltd. would establish a new CSC for which suitable advice would be issued by the CSC Services India Ltd. In case this is not feasible, the Banks could engage a new BCA.