Financial inclusion has been a key precedence for India, as a massive phase of the population remains unbanked. According to the National Survey Sample Office(NSSO), around 90% of adults had a bank account in India as of 2021. The gaps are more expansive in rural regions and for women.
Providing access to primary, affordable banking services to the unserved and underserved sections has therefore emerged as imperative. In this context, kiosk banking plays a pivotal role by offering a practical and cost-effective solution to extend banking services to remote areas and bridge the existing financial gaps.
Purpose of Kiosk Banking
The primary motive of introducing kiosk banking in India is to further financial inclusion by way of offering primary, no-frills banking services in remote rural areas and urban slums efficiently.
According to the National Family Health Survey (NFHS) records, only 67% of the population in rural India has proper access to formal banking services under the Jan Dhan Yojana. Kiosk banking strives to fill this huge gap, wherein setting up traditional bank branches might not be financially possible for mainstream banks.
With small investments in localised kiosk banking infrastructure, a study discovered that financial inclusion multiplied by 15-20% in rural regions with kiosk rollouts in comparison to regions without coverage.
The Rising Role of Kiosk Banking
This is where kiosk banking performs a vital role. The kiosk banking outlets have been estimated to be expanding at a compound annual growth rate of 13% from March 2017 to March 2022. As of 2022, over 249,000 kiosk banking retailers are functional in India.
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Kiosk banking essentially refers to providing banking services via small service stores in faraway areas and villages. These kiosks, set up as a part of the financial inclusion initiative, allow people to open bank accounts, deposit and withdraw cash, transfer cash and make bill payments without having to visit formal financial institution branches.
Kiosk Banking Components
Kiosk Banking involves putting in place booths in local shops or retail points in villages, offering smooth access to clients. There are fundamental parts to a Kiosk Banking system:
- Customer Service Point (CSP)
This is a counter in the store connected to a bank. Customers can visit the CSP for assistance with transactions or account-associated queries.
- Kiosk Machine
The Kiosk Machine, placed within the booth, lets users carry out various banking services like depositing cheques and checking balances. It includes a Barcode Scanner, Cash Acceptor, Thermal Printer, Speaker, Keyboard with Trackball, and Touch/Non-Touch Display, and a Video Camera.
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Who Can Function Kiosk Banking?
Kiosk banking structures can be set up by:
- Shop owners
- Retailers
- Small enterprise owners
- Individuals
Eligibility standards
- Age: Above 18 years
- Education: Completed 12th standard
- Space: a hundred-two hundred square feet available for the kiosk setup
- Infrastructure: Computer and internet connectivity
Small businesses registered underneath MSME can also install a Customer Service Point alongside the kiosk.
Banks provide the necessary equipment like kiosk terminals, fingerprint scanners, software, and many others. Shop proprietors get a commission fee on transactions completed through the kiosk banking facility.
Key Features and Benefits
Let’s examine the functions and advantages of kiosk banking in detail:
1. No Minimum Balance
Kiosk banking accounts do not require account holders to preserve any minimum average balance. This makes such accounts enormously cheap and accessible for lower-income businesses that may not be able to hold large account balances. By eliminating the load of minimal balance, kiosk banking has helped bring the unbanked populace under formal financial access.
2. Cash Transactions
Kiosk banking centres permit all transactions in cash form. This fits the needs of rural target groups like daily wage workers, small farmers, and many others. About 72% of people, in most cases, prefer to deal in cash. By catering especially to cash-based transactions of a wide variety such as deposits, withdrawals, cash transfers, mortgage payments etc., kiosk banking solves a primary pain factor of accessibility for the cash-dependent populace.
3. Aadhaar based
Most kiosk banking outlets permit biometric-based authentication using an Aadhaar card. Over 80% of kiosk banking accounts are presently linked to the Aadhaar system. This offers problem-free, paperless account opening and subsequent operating of accounts for rural citizens who might not own formal KYC files. The thumb-impression-based, presence-less Aadhaar authentication builds belief and self-assurance among the rural masses to utilize kiosk banking.
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4. Transaction Limits
To avoid misuse, kiosk banking accounts come with limits on everyday cash withdrawals (₹10,000) and total account balance (₹50,000) at any point. Once the balance exceeds ₹50,000, the account is converted to a regular account. The described transaction limits make such accounts extremely appropriate and useful for the target groups dealing in smaller sums of money.
5. Zero/Low Charges
As consistent with RBI’s guidelines, kiosk banking accounts are mandated to have both zero and minimal costs to ensure affordability. This guarantees that the vital target businesses can avail of the offerings without financial burden. It is a primary benefit over formal banking channels that usually levy heavy charges.
6. Insurance Cover
Some main banks have started presenting free accident insurance cover of up to ₹10,000 to kiosk banking account holders. This provides the attractiveness and sense of safety for lower income groups to adopt such accounts, helping power greater financial inclusion.
7. Customer Service Points
A striking feature of kiosk banking is that the local shopkeeper handling the kiosk outlet also serves as a customer service factor. They assist clients, especially the ones unfamiliar with banking techniques, to carry out transactions easily. This last-mile banking facilitation is going a long way in making economic services user-friendly and seamlessly adaptable, even for rural groups.
Business Opportunities
Kiosk banking has also created income possibilities for small rural entrepreneurs. As of 2022, 249,000 kiosks throughout India have been operated by means of Common Service Centre (CSC), banking correspondents, and other individuals. With the rising adoption of digital payments, the scope for kiosk banking outlets to supply value-added services like bill payments, ticket bookings, etc., expands considerably.
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Takeaway – The Road Ahead
While India nonetheless has a significant ground to cover in financial inclusion, kiosk banking has already demonstrated its effectiveness in serving marginalized groups. As per rough estimates, the monthly profits of kiosk operators averaged between ₹8,000 to ₹15,000 – supplementing rural incomes even as facilitating last-mile financial access. With continued focus and awareness amongst the masses, kiosk banking can accentuate significant socioeconomic development.
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