RBI revises operational guidelines for smart card-linked financial inclusion plan

The Reserve Bank of India (RBI) has issued revised operational guidelines on implementation of Electronic Benefit Transfer (EBT) and its convergence with the government's financial inclusion plan. Under the revised guidelines, state governments will select the leader bank for EBT implementation in respect of a particular district and designate a nodal department for coordination at district level.  The state government will also sign a memorandum of understanding (MoU) with the leader bank in respect of a particular district. The leader bank will make arrangements with other participating banks in the district, on revenue sharing contract. The nodal department will give a list of all beneficiaries to the leader bank, which in turn will distribute the list of beneficiaries among all participating banks. Participating banks will select and appoint the technology provider and deploy BC/CSPs in all villages. BC/CSPs will, in turn, enroll all beneficiaries and participating banks to open accounts and issue smart cards. The nodal department will open a savings bank account with the leader bank and provide files electronically containing details of beneficiaries each month and arrange for crediting the required amount into the saving bank account with the leader bank. The leader bank will arrange for crediting the amount electronically to other participating banks. Participating banks will credit the beneficiary accounts on the same day and send confirmation to the leader bank, which will, in turn, confirm credit to the nodal department. The funds are then at the disposal of beneficiaries for use as per their requirements. Participating banks should provide MIS reports to the leader bank which in turn to should submit reports to the nodal department. Leader banks should make reconciliations with the nodal department, preferably, on daily basis, but at least on weekly basis. The leader bank should mail developments in the implementation of EBT to the DCC/BLBC levels every month. Any policy or structural issues in the implementation should be discussed at SLBC level. EBT or `Smart card' meant for servicing low-value accounts and extending banking infrastructure to underserved low income areas has been implemented in the states such as Andhra Pradesh, Haryana, Karnataka, Orissa, Chhattisgarh, Himachal Pradesh, Uttarakhand, Bihar, Punjab, etc on pilot basis in select districts under the `One District - One Bank' model. However, stakeholders have expressed difficulty in scaling the model and the scheme has not been able to achieve the objective of financial inclusion. The financial inclusion plan aims at providing banking services to all villages with population above 2,000, on the basis of the service area approach. However, there has been a mismatch of the designated bank for EBT and FIP in the same village, which complicated the scheme. The new operational guidelines on implementation of EBT and its convergence with FIP has been formulated for clearer conceptual understanding and based on detailed consultative meetings and interface with stakeholders, RBI said.

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