Banks to get 1% commission on Direct Benefit Transfer (DBT) transactions

To lessen the implementation costs of DBT by banks, the government has decided to pay a commission of 1% to banks on the total amount transferred under the scheme.

The commission is primarily being paid to compensate Banking Correspondents (BCs) who would help implement the scheme

In an office memorandum issued on 09/04/2013, the Department of Expenditure said the government considered issues related to payment of commission BCs for transactions carried out by them under DBT and decided to pay a flat rate of 1% to banks.

The government has recognized that a viable BC network and a reasonable recompose to banks are a pre-requisite to successful implementation of the scheme.

The fee is a stop-gap arrangement till the time necessary software tools to distinguish transactions completed through normal banking channels and BCs are in place.

“The commission would be paid subject to the condition that after the next six months, it would be examined by the banks whether the amount transferred through BCs is more than or equal to the amount transferred under DBT. If it is found that the amount transferred through BCs is less than the amount transferred under DBT, the commission would be reduced on a pro-rata basis,” the memo said.

Once, the technology is in place to assess the value of transactions carried out by BCs, commission at 2% of the amount actually transferred through BC under the DBT scheme would be given. Well, now it is up to the Banks to develop the technology required to distinguish between BC transactions and normal banking channels and earn the extra 1% from the Government.



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