In a bid to incentivise banks for facilitating direct cash transfers to Aadhaar-enabled accounts - which may not bring any business to the banks - the government is considering paying them a transaction fee. A business model is being worked out to help banks recoup their transaction costs.
Although the transaction costs would vary depending on the frequency of withdrawals and deposits from a bank account, the government is considering paying a transaction fee for all last-mile payments to the banks at the rate of 3.14 per cent of the amount of transaction with a cap of Rs 20 a transaction.
"There will be a cost to the bank in each transaction. The banks may not get much business from such accounts as the beneficiaries may immediately withdraw the money as soon as it is transferred to the account. Moreover, most of these transactions will involve very small amounts. But administration costs broadly remain the same, no matter what the amount is," said a finance ministry official.
Earlier this year, the Nandan Nilekani-led Task Force on Aadhaar-Enabled Unified Payment Infrastructure had suggested in its report that at the rate of 3.14 per cent, the total transaction fee could be Rs 5,000 crore when the scheme is fully implemented. It, however, added that as subsidised goods such as fertiliser, liquefied petroleum gas (LPG), kerosene, and food would be purchased using electronic payments over time - obviating the need for reimbursement of the subsidy - the actual expenditure might be much lower.
Currently, the cost incurred in some of the government disbursements through cheques is borne by the banks themselves. A transaction involving cash deposit at a bank branch or payment of cheque costs about Rs 40-50, while at an ATM it comes down to Rs 15-20 per transaction. Officials said in case of cash transfers through Aadhaar, the government would bear the cost so that the banks do not hesitate in opening such accounts.
The direct cash-transfer scheme will be rolled out in 43 districts from January 1, but the business model for recouping transaction costs of banks would not be in place immediately as a final approval for the model is still awaited. Till the time it comes into force, banks will have to take the burden. The costs would not be huge initially, as only a few schemes are covered under the scheme at present