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)

Southern Banks begin financial inclusion process in villages

South India- based banks such as Corporation Bank, Karnataka Bank have kickstarted the financial inclusion plan as envisaged by the Reserve Bank of India to provide financial services to the rural populations. Most of these financial institutions are also in the process of appointing business correspondents who will work as financial intermediates between banks and the rural people. The Corporation Bank has a plan to extend financial services in 212 villages by the end of this fiscal of which they have already covered around 80% of the villages as of now under financial inclusion plan, said the Executive Director, Corporation Bank. However, the Bank is yet to tie up with any "for-profit" or "not for-profit" organisation to act as business correspondents.
The Karnataka Bank plans to cover 75 villages under the financial inclusion plan in the present fiscal.
Under financial inclusion plan, banks will open no-frills accounts with service provisions like deposit, withdrawal, remittance payment, loan repayment among others excluding cheque services. Vijaya Bank has also recently started its financial inclusion plan from Mandya district of Karnataka.(BS 07.10.2010)