In a rush to maximise the scope of the direct cash transfers, the finance ministry has directed all public sector banks to extend the banking coverage throughout the country.
Giving public sector lenders just a week’s notice, the finance ministry has asked them to ensure at least one bank branch or banking correspondent is present in every gram panchayat. Taking forward its concept of a service area, the finance ministry has now also introduced the concept of a sub-service area, which would consist of 1,000 to 1,500 households.
This would be a marked shift from the government’s current Financial Inclusion Programme, where banks had provided banking services in over 74,000 habitations with population of over of 2,000.
“This is being extended to habitations of 1,000 and above population in the north east and hilly states and 1,600 and above population in the rest of the country this year,” the finance ministry has said in a recent missive said, adding that since the population of gram panchayats varies across the states, banks need to ensure that about 1,000 to 1,500 households are available in the sub-service area of a banking correspondent.
With the direct cash transfer set to roll out in 43 districts from January 1, 2013, the finance ministry has called for a ‘comprehensive plan’ to extend banking services and asked for the infrastructure to be in place by Thursday and has asked for consolidated state wise information by December 31.
In the rest of the country, where direct cash transfers will be started in a phased manner, banks have been given a deadline of 25 January.
But in the long run, banks have been advised to migrate from the correspondent to the kiosk banking model in each of the service areas, where mobile vans fitted with ATMs provide biometrically enabled services in unbanked areas.