PACS in uncovered gram panchayats to be upgraded to bank branches in Odisha

The state government is providing space to banks for opening branches at GP level free of cost for five years. 

Published: 11th March 2023 07:42 AM  |   Last Updated: 11th March 2023 07:42 AM   |  A+A-

Niranjan Pujari

Odisha Finance Minister Niranjan Pujari (Photo | EPS)

Express News Service

BHUBANESWAR: As brick-and-mortar branches continue to elude a large number of gram panchayats (GPs) in the state and scheduled commercial banks are reluctant to operate in rural areas due to lack of financial viability, the state government is seriously contemplating upgrading primary agriculture cooperative societies (PACS) to meet the banking needs of the people.

As many as 2,000 GPs are currently having PACS which provide basic banking services mostly to cooperative sector. “We are planning to upgrade these PACS to meet the banking requirements of people,” Finance Minister Niranjan Pujari told TNIE on Friday. The government is also in talks with the State Bank of India (SBI) to operate low-cost-model banks in rural areas. It is ready to work out viability gap funding which will be required for operating such branches.

“Harnessing technology and IT, the SBI is ready to set up the banking unit, which would be at least one level lower than a bank branch, in the uncovered areas. Since there is the maker and checker system of the Reserve Bank of India (SBI), we have requested to change that to facilitate such unit and bring down the operation cost substantially. The exercise on viability gap funding is still on,” Pujari said.

Of the 6,798 panchayats in the state, only 2,630 GPs have brick-and-mortar branches. Financial inclusion of the majority of 4,146 GPs is made through either banking correspondents, customer service points or Indian Postal Payment Banks. Plans are afoot to provide banking services to the remaining 2,146 unbanked GPs through upgraded PACS or low-cost-model bank branches of the SBI, Pujari added. The state government is providing space to banks for opening branches at GP level free of cost for five years. 

Panchayats without space for banking operations are provided Rs 9.5 lakhs from the funds of the Finance Commission for construction of building for this purpose, the minister added. The issue was also discussed at the state-level banker’s committee meeting here on the day. The meeting attended by  development commissioner Anu Garg and principal secretary Finance department Vishal Dev along with heads and representatives of different banks was informed that 270 unbanked GPs were earmarked for opening branches. The Odisha State Cooperative Bank had been allotted 42 GPs, SBI 28 and other banks 200. However, only six branches have been opened by end of 2022.

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