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Rediff.com  » Business » Centre plans doorstep banking in Red Corridor

Centre plans doorstep banking in Red Corridor

July 09, 2010 03:22 IST

The finance ministry is planning to change the face of banking in the Red corridors at the tribal heartlands of India. The move is part of the government decision to redraw its law and order management and development plans in view of the growing Naxalite menace threatening India.

As the banks, like any other government institutions bear the brunt of Naxalite terror, Finance Minister Pranab Mukherjee is mooting the model of business correspondence to serve customers in Naxalite-hit areas.

Mukherjee wants public sector banks to take a lead and adopt the business correspondence or bank-service-at-doorsteps model through authorised representatives. Initially, the banks will be roped in to deliver financial services for government schemes like the National Rural Employment Guarantee programme or various pension schemes for the Below Poverty Line (BPL) people.

The ministry said there are many banks that have branches and necessary logistics in place in Naxalite-infested areas, but their functioning has been severely hit due to the deteriorating law and order situation.

Whenever there is a Naxalite attack or a bandh called by the Naxalites, several branches prefer to remain closed. "There are instances where local branch officers have fled to their homes or district headquarters and the bank remained shut for quite a few days, causing problem for the customers," said a top finance ministry official.

In the proposed arrangement, a representative of the bank will visit the homes of beneficiaries in the villages to give or receive payments. The government has already initiated a pilot project through business correspondences for the Mahatma Gandhi National Rural Employment scheme in select parts of Rajasthan to prevent the delay in payments to MGNREGS workers.

The usual practice for banks is to deduct 2 per cent of the transaction amount as its service charge, for offering services through business correspondences. However, the government would have to bear the expense of the service fee for disbursement of wages to the MGNREGS workers or for the monthly old-age pension to BPL families. Mukherjee has hinted, in his close quarters, that these charges can be recovered by the banks from the 6 per cent administrative expenses attached to the government schemes.

According to Mukherjee, the business correspondence model will not only make banking faster but also make it hassel-free in these trouble-torn areas. The villagers will not have to travel long distances. The aam aadmi of the Congress can get their money in time, at their door-steps.

 

Saubhadra Chatterji in New Delhi
Source: