agent s of f i nanc i a l i nc lu s i on
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3.10 ELECTRONIC PAYMENT:
THE RUPAY CARDS
RuPay card payment scheme introduced by NPCI in
March 2012 aims at ‘mass cardification’ of customers. It
is designed to evolve into an efficient domestic alternative
to international payment product facilitators such as
Master Card and Visa. The other objective is to enable all
Indian banks and financial institutions to participate in
electronic payments.
Since its introduction the number of card-issuing
banks has risen from around 60 to 238 (35 scheduled
commercial banks and 203 cooperative banks and RRBs).
In June 2013 RuPay went online for e-commerce use on
its course to finally become a credit card. NPCI has tied
up with two banks for e-commerce. The target is to cover
all the banks and about 12,000 online merchants.
NABARD has taken the initiative to promote the use
of the RuPay Kisan Cards among rural population as
ATM cum debit cards by helping the cooperative and
regional rural banking system implement the CBS, and
facilitating the setting up of POS machines and micro
ATMs. Up to May 2013 close to 65,300 RuPay Kisan
Cards were issued. Karnataka and Maharashtra were the
first states to have rolled out the scheme.
CONCLUDING OBSERVATIONS
The first phase of technology initiatives in financial in-
clusion was meant to develop systems to operationalize
models based on low-cost branches and business corre-
spondents. This phase to some extent has brought in more
financial services such as loans, deposits, withdrawals and
payments closer to customers in a fairly secured, conve-
nient and low-cost manner. While the pace of technology
adoption by the banking and financial services sector over
the past decade has been rapid, majority of the customers
seem more comfortable dealing directly with banks. The
InterMedia study (2014) reports that typical consumer
of financial services still trusts public sector banks, relies
of personal networks and prefers to transact in cash. The
experience so far with ATM and card technology shows
that technology takes time to evolve and the policies
take time to mature. Going forward, the newer technol-
ogy initiatives linked to and enabled by complementary
efforts such as Aadhaar and IMPS may bring in inno-
vative ways to deliver financial services to customers in
remote and difficult areas who can relate to the financial
system in their individual right. This seems a plausible
reality, but a distant and dear one, looking at the current
level of trust and capability among the potential users
and the required levels of investment.
NOTES
1. Under the interest rate policy at the time, loans of less than
Rs. 2 lakhs, as envisaged under the RBI’s BC Model, had
to be contracted at no more than the Benchmark Prime
Lending Rate (BPLR)—then around 11 to 13 per cent.
This included the BC’s commission to be met by the bank.
This is a far cry from rates chargeable under the bank-MFI
partnership model then and the bank-BC/MFI models being
implemented currently. Khan and Dash (2007) noted that
the commission paid by a leading private bank to the BC in
Orissa was 2 to 3% of loans disbursed and that such activity
alone could not be sustainable with this rate of commission at
the current business level. This is a far cry from rates charge-
able under the bank-MFI partnership model then and the
bank-BC/MFI models being implemented currently.
2. The Customer Service Point (CSP) is typically a recogniz-
able person in the village who is either stationary (typically a
shop in the village) or mobile (visiting a series of villages on
pre-defined days and providing doorstep services), offering
account opening, deposits, withdrawals and balance checking
on behalf of the BC (Grameen Foundation, 2013).
3. Chen, Srinivasan and Thoumoung (2013).
4. It had suggested that start could be made by allowing MFIs
to be involved as BCs in savings services since as NBFC-MFIs
they do not generally offer these services.
5. Vide RBI Circular no. RBI/2013-14/ 653 DBOD.No.BAPD.
BC.122 /22.01.009/2013-14 dated 24 June 2014.
6. Corporate BCs would usually be Section 25 companies
floated by TSPs towards a tie-up to carry out the financial
functions in providing end-to-end services.
7. An early Microsave study suggested that in the perception of
customers on all parameters except trust, BC network man-
agers delivered better than individual BCs primarily because
they were dedicated to, and focused on, the success of the
overall system (Jos and Ramji, 2011).
8. One of the major difficulties in the growth of the BC model
was also the unwillingness of most banks to provide loans
through BCs. (See also Box 3.3.)
9. Summary of report in Ananth and Öncü (2014).
10. Ananth and Oncu (2014) also noted that an impressive
technology platform had been built by the state to transfer
various government welfare benefits through a technology
company. Along with the network of this TSP-CBC, banks
