Business correspondents seek subsidy for PoS terminals in villages

At present, only banks get federal money support for deploying point of sale (POS) devices in rural areas.

MUMBAI: Business correspondents — key agents in helping achieve New Delhi’s financial inclusion mandate — have reached out to regulators for extending device-related subsidies in rural areas to fintech companies and non-bank organisations.

At present, only banks get federal money support for deploying point of sale (POS) devices in rural areas, a facility the lenders rarely utilise because of unfavourable cost economics. POS devices are swipe machines that accept debit card and credit card payments.

These machines can be used as access points in rural areas for services such as cash withdrawal and biometric transactions on accounts linked with Aadhaar.


“We have had meetings with both Department of Financial Services (DFS) and the Reserve Bank of India on this matter. While the current mechanism is elegant where banks are incentivised for POS deployment in the hinterland, most banks are not in the business of payments and these funds end up being underutilised,” said Anand Shrivastav, chairman, Business Correspondent Federation of India. The current mechanism utilises the Centre’s Rs 230-crore Financial Inclusion Fund (FIF), which is managed by National Bank for Agriculture and Rural Development (NABARD).

Under the subsidy scheme, rural and co-operative banks can avail 100% subsidies on the capital cost for deployment of these swipe machines in tier 5 and tier 6, while scheduled commercial banks can avail 80% of the device cost. NABARD did not respond to an emailed query.

The stringent eligibility criteria and high logistic costs prevent banks rom availing these subsidies, said a senior private sector banker. Further, the cost of operating these access points in rural areas, where volume and value of transactions are much lower than in urban centres, is not a viable business option for banks.
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