Ration shops to become banks

In a quantum leap for financial inclusion in Maharashtra and for improving access to formal credit networks, the state government has designated around 52,000 fair-price shops as banking correspondents. This system, which will be launched early this year, will also help tide over the post-demonetization cash crunch.

The state government is also installing micro-ATMs in the 30,000 citizen services centres (CSCs) across Maharashtra where bank account holders can withdraw up to Rs 2,000 using debit cards. Put together, these initiatives will ensure over 80,000 new access points for citizens to conduct cash withdrawals and banking transactions.

The ration shop owners will use the biometric authentication-based point of sale (PoS) micro-ATM terminals equipped with card swipe facilities, which will be installed in these establishments by the state government to eliminate ghost beneficiaries and pilferage from the public distribution system (PDS). These machines will be used to connect with the core banking systems of designated banks to enable transactions.

“We have held discussions with officials from the National Payments Corporation of India (NPCI) and some banks for appointing these fair price shop owners as banking correspondents. These PoS machines, which are expected to be installed by March-end, will be used for Aadhaar-based banking transactions,” said an official from the state food and civil supplies department.

As business correspondents, these shopkeepers will be able to collect small value deposits, disburse small value credit, sell micro-insurance, mutual funds and third-party products, conduct preliminary processing and verification of loan documents and follow-up on recoveries. Maharashra has 51,363 PDS shops, including 3,600 in Mumbai and Thane's urban areas.

“This scheme will make cash available to people and benefit both the citizens as well as the shopkeepers,” Girish Bapat, minister, food and civil supplies, told DNA.

“They will become banks in the villages,” noted Mahesh Pathak, principal secretary, food and civil supplies, adding that they had held meetings with PDS shop owner unions who had welcomed the initiative.

Pathak said that in November, they had issued letters of intent to the three system integrators who have begun setting up the POS machines, which are expected to go live in most areas by March 31. 

“Once the machines come in, they will become business correspondents, provided all relevant documents are submitted,” he added, stating that the remuneration to be paid by banks to the shop owners will depend on the agreement entered into by these two parties.

District collectors have been asked to secure consent letters from all fair price shop owners who wish to work as business correspondents.

Maharashtra has around 1.48 crore ration cards (or 7.0016 crore targeted beneficiaries) covered under the National Food Security Act (NFSA), 2013. However, the use of micro-ATMs will be available for all regardless of whether they are NFSA beneficiaries.

The biometrics-based project is being rolled out in three groups, namely Mumbai, Konkan and Nashik; Aurangabad and Pune; and Nagpur and Amravati.

M Sankaranarayanan, Director, Information Technology (IT), Government of Maharashtra, said they were setting up PoS machines the 30,000 CSCs (Aaple Sarkar Seva Centres). The eco-system will be covered in phases by March-end and these micro ATMs can also be used for availing cashless Government to Citizen (G2C) and Business to Citizen (B2C) services. Cash disbursals had started at some of the 4,100 sites where these machines had been installed.

“These machines will be bank agnostic and debit cards of all banks will be covered,” he said.

While the Reserve Bank of India (RBI) data says that 56 banks across the country have 2,02,801 on-site and off-site ATMs, the number of POS machines stands at 14,61,972 as on August 2016.