A new ‘ration’ale to visit FPS: Banking, buying insurance

Soon, the fair price shop (FPS) near your house could be your bank.

The state government is transforming these shops into banking correspondents (BCs). This follows instructions from the department of food and public distribution of the union government.

The initiative provides extra income to FPS owners and curbs irregularities in the shops which come under the food, civil supplies & consumer affairs department (FCSCAD).

This August, FCSCAD signed a memorandum of understanding (MoU) with the Indian Post Payment Bank (IPPB) to provide banking services to citizens.

In just four months, of the 20,283 FPSs, Karnataka has converted 3,317 FPSs into BCs, highest in India. Madhya Pradesh and Telangana are the only other states to have signed the MoU with IPPB.

However, MP has converted only 304 FPSs into BCs and Telangana just 30. Sources said Karnataka is helping other states in implementing the initiative.

It was found that not many FPS owners in the state were willing to operate their shops round the clock (except on Tuesdays) due to the low commission paid to them. Unlike other states, where the commission paid to FPS owners is high, shop owners in Karnataka get just Re one per kg of rice distribution.

FCSCAD additional director (IT & vigilance) Gyanendra Kumar Gangwar admitted that the commission in the state was low compared to other states. There were also allegations against FPS owners, of ‘stealing’ rations meant for the poor to make money.

The initiative to convert them into BCs will help curb such activities and enhance the income for FPS owners. The FPSs are now more viable, Gangwar said.

“In the first phase, we aim to convert 9,000 individual fair price shops into BCs. At present, we have reached 50% of the target. In the second phase, the department will focus on the remaining 11,000 FPSs which are managed by co-operatives, societies, self-help groups and others,” he said. Bagalkot has converted the highest number of FPSs into BCs (298), followed by Belagavi (292), Chitradurga (242), Tumakuru (228) and Dharwad (214). Udupi (4) is at the bottom of the list.

Gangwar said although the department signed the MoU with IPPB in last week of August, it took a couple of months to negotiate conditions.

The FPS were not keen initially. With the collective efforts of FCSCAD and IPPB officials, awareness campaigns were organised at the district and taluk levels. The campaign picked up pace in the last two months, he said.

Shilpa, IPPB representative for converting FPSs into BCs, said through BCs, the bank had implemented Aadhaar-enabled payment system, where customers can draw money from any bank account, can open digital account with IPPB, take insurance policies (low-cost premium with group accident guard of Rs 399 per year with a benefit of Rs 10 lakh and all kinds of general insurance) and avail of other services. For creating one digital account and selling an insurance policy, the FPS owner get Rs 10 and Rs 15, respectively. FPS owners who were earning Rs 6,000 to Rs 7,000 a month are now getting Rs 12,000 to Rs 15,000, she said.

Hanumayya M, owner of an FPS in Rajajinagar, Bengaluru, which has been converted into an BC, said he distributes rations to 600 cardholders. But the commission was not enough for him to run the family. He expects additional income with the new initiative.

Lakshmamma, 55, from Bengaluru West, said she had opened an IPPB account and her family had taken an insurance policy.