The deadline of direct cash transfer scheme is approaching fast and the government of India is trying hard to make sure that financial institutions reach to the last person in the country.

In the light of this idea, the Common Service Centre e-Governance Services India Limited (CSC-SPV), an initiative of the Department of Electronics and Information Technology (DeITY) conducted a workshop on ‘Catalyzing Financial Inclusion through CSCs’ on Thursday at the India Habitat Centre in Delhi. 

Inaugurating the workshop, Rajiv Gauba, additional secretary, DeITY said, “There are 96,000 CSCs functional across the country. In a given month, more than one crore transactions happen in real-time with a total transaction volume of Rs. 245 crore. This gives bright outlook for the CSCs being used for delivering financial services to the rural citizens.”

B Sambamurthy, Institute for Development & Research in Banking Technology (IDRBT) said that it is very important to understand the ‘finance’ element when we talk about financial inclusion in India. Hence, it is important to provide a viable business model to the village level entrepreneurs (VLEs) who operate the CSCs. This way, they will be able to provide services while making a living for themselves. “There is a difference between rendering services and financial inclusion,” he said.

He said that due to the Business Correspondent Deregulation Policy, there are now 1, 40, 000 business correspondents (BCs) in India. The BCs provide banking services to people who do not have banks near them, for example people in remote areas or areas affected by insurgency.

Due to the important role played by the BCs in providing financial services to everyone, Sambamurthy said that they should be considered to be an extended arm of the bank. He also said that the CSC model should think beyond the transaction-centric model. “It should be a volume based model and the CSCs should try to leverage the volumes,” he said.

Ashish Kumar Roy, CGM – Rural Business, State Bank of India said that CSCs are to be the BCs of the future as they are more viable to provide banking services to people across the country. He said that the CSC can provide banking services in addition to the other government services provided by it to the people. “The investment to provide financial services is low as one just needs to provide three to five thousand rupees for fingerprint scanner,” he said.

However, situation on the ground is not all hunky dory. Many a times, the finger print scanners are either not delivered to the CSCs by the manufacturers or when delivered, are faulty. Apart from that, the VLEs do not return the loan amount to the banks which they had borrowed to set up the CSC. If this trend continues, Roy said, it would be difficult for banks to provide loans to VLEs. “It is important that VLEs maintain their creditworthiness,” he said.

Another problem is of the biometric fingerprint scanner which returns faulty results for some inputs. Due to heavy manual labour, the farmer’s fingers develop pores which are not read correctly by the reader. This is one of the biggest problems for any identification scheme connected with biometric identification as the equipment cannot read the fingerprints if they undertake a lot of manual labour.

Roy also said that it is important to monitor the CSCs post their implementation.

Presently the CSC model does not present a viable business model for the VLEs as the Government to citizen services (G2C) services do not give them enough returns to run the place profitably. The absolute low shares of the VLE, as low as 0.5 percent of the total transactions for the G2C services have made it impossible for them to support themselves without offering additional services.

According to Niraj Gupta from NABARD who presented his views later in the workshop, there is a lack of cooperation between the technology service provider, banks and CSCs which makes it very difficult for CSCs to function smoothly.

He said that CSCs can be viable when banking is also provided by the CSCs. These banking services can act as additional services to the already present G2C services in the CSC which can help the CSC to sustain itself. 

The series of workshops will cover a wide range of services being delivered through the CSCs. They will focus on the areas such as financial inclusion, digital literacy, education, healthcare, agriculture and Aadhaar services through CSCs. Aimed at building sustainability of the CSC, these workshops will enable various stakeholders to come together and create appropriate frameworks for catalyzing delivery of key services to rural areas. The present workshop on financial inclusion was the first in the series.