Give banks a break

The government should lose no time in keeping its commitment to pay nationalised banks their commission for undertaking its social agenda through the Jan Dhan Yojana, DBT and other programmes.

This year-long delay since 175 million accounts were opened fuels resentment over the fact that commissions are lower than mandated by the Nandan Nilekani-led task force on Aadhaar-enabled payment systems. The government fixed the commission at just one per cent per transaction, with a cap of 10 per cent, against the 3.14 per cent with a 20 per cent cap suggested by the task force. 

While the schemes are imperative to get economically weaker sections, especially in villages, into the financial mainstream, the government shouldn’t expect banks to bear the cost. The State Bank chairman has sought a level playing field for public sector banks, that will enable them to compete with private sector banks.

The IBA estimated the cost to the banks will be between Rs 1,500 crore-2,000 crore, with the cost of opening an account being around Rs 75-100. One doesn’t know what parameters the government used to fix the commission at one per cent. Now that banks have said how much it costs them, may be the government could see if there is enough room for banks to cut their costs through more efficient means.