Banks' commission from Govt. business set to rise

Commission earned by banks on Government business are likely to rise with the Reserve Bank of India setting up a committee to review the existing payment structure. The structure is generally reviewed every five years. It was last reviewed in 2005. RBI has formed a committee under A M Pedgaonkar for the review.
Banks receive Rs. 60 per transaction in case of pension payments. For other payments, they get nine paise for every Rs.100. For receipts, they get Rs.45 per transaction. Bankers have made a case for increasing the commission to 15 paise per Rs.100 for payments other than pension and to Rs.100 per transaction in case of pension.
The country's largest lender, State Bank of India(SBI) has the major share in Government business. More than 7000 branches of SBI conduct Government business. As such, State Bank of India will be the biggest beneficiary.
Recently, the Central Bank asked State Governments not to engage private sector banks. The wide network of state-run banks, especially in rural and semi-urban areas, was seen as an effective means to carry out Government transactions.(BS 07.10.2010)