Corporation Bank’s branchless banking model is gaining acceptance among people in rural areas.

Sound growth in the number of accounts with small amounts being transacted indicates that the bank’s branchless banking business model is being accepted by people in villages, said J.M. Garg, Chairman and Managing Director, Corporation Bank.

He told The Hindu, that Corporation Bank was the pioneer in branchless banking. The bank has branded it Corp Grameen Vikas Kendra. “It is branchless banking by villagers and for villagers,” he said.

The bank is using the technology to benefit rural people obviating the need for opening regular branches. A total of 114 branchless banks are operating in Karnataka covering 223 villages. There are 180 branchless banks covering 418 villages in the country. The bank has set a target of covering 2,000 villages across the country by the end of 2010. The bank is concentrating on Karnataka, Andhra Pradesh, Tamil Nadu, Kerala and Goa for implementing the scheme. The bank is also planning to open such units in slums.

Under the business model, which was launched in November 2006, the bank appoints a business correspondent in a chosen area who uses biometric smart cards and voice-guided systems to provide secure banking operations to rural people. The customer has to place his or her left thumb on a device. The device confirms, by voice response, the authentication of the transaction to the customer and the banking correspondent.

Over 70 per cent of the business correspondents are women. The bank provides the device, which costs Rs. 20,000, to operate branchless banks and pays a monthly salary of Rs. 1,500, which is additional income for most of the correspondents. This is a part-time business for the correspondents who operate from home.

The number of villages covered by branchless banking district-wise is: Bagalkot – 10, Bangalore Rural – 17, Belgaum – 22, Bellary – 10, Chikmagalur – 20, Chickaballapur – two, Dakshina Kannada – 22, Davangere – five, Dharwad and Bidar – one each, Hassan – 55, Haveri – three, Kodagu 14, Kolar – six, Mysore - 4, Ramanagara – 5, Shimoga – 11, Udupi – 13 and Uttara Kannada – 2.

A few business correspondents said people could not only save time and money by not having to go to a bank branch in the nearest town but also save small amounts.

The official said that under the branchless banking system, bank deposits were higher than withdrawals. One of the reasons was that even small deposits (as small as Rs. 10) were accepted. These banks conducted 20,000 transactions involving Rs. 26 lakh a month. The maximum amount permitted to be withdrawn is Rs. 2,000 a day.