The State bank of India (SBI) country’s largest public sector bank has cropped up a new technique for transactions. Under the new technique the transactions would be card-less and will require only an account holder’s fingerprints.
The bank with a view to lower the cost of transactions has decided to give out with cards, especially for the distribution of social security pensions and wages under the National Rural Employment Guarantee Scheme (NREGS).
The new system will be implemented across the country and for this a point of sale (POS) machine, comprising bio-metric details of account holders will go to a particular village where the bank’s customers would be able to withdraw or deposit funds using the fingerprint-based method.
Previously, each account holder was issued a card with a magnetic strip that was swiped at the POS machine before any transaction. The smart card was priced according to its memory. For instance, 4GB cards cost Rs 75, whereas it costs Rs 140 for a 32GB card.
NREGS was set up in 2004 since then SBI had disbursed around 1.6 million smart cards across the country, before taking a decision of shifting to the new system a couple of months ago. S Mukhopadhyay, deputy general manager in the bank’s rural banking department said, “In the last two months, we have opened more than 400,000 accounts but we have not disbursed any smart cards thereby saving close to Rs 3 crore.”
One more reason behind bank’s switching to the new system is the fact that 2% of the no-frills account holders stepped out of their villages. As most of the account holders just access the bank to receive the pension or the NREGS payment, therefore a banking correspondent can easily go with a POS machine at periodic intervals to help them complete their transactions.
“These villagers do not require inter-operability, which a smart card offers, since most of them use their accounts only once a month to avail of the NREG scheme, practically the accounts remained dormant for the rest of the month. Therefore, it was not cost-effective for the banks to carry on with cards,” an SBI executive said.
However other banks, have not yet decided to shift to card-less transactions. An executive of a public sector bank told, “Different banks use different technologies and we are sticking to a card-based system, at least for the time being.” Another banker while expressing his views said the cost-saving is not important.
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