A technical group constituted by the Reserve Bank of India examined the proposal made by UR Rao, a member of the RBI?s Board for Regulation and Supervision of the Payment and Settlement Systems (BPSS), on the use of satellite communication technology to facilitate penetration of payment services to the rural areas.
The technical group has recommended that use of satellite connectivity would facilitate integration of the rural branches with their core banking solution and help providing funds transfer facility to their customers.
The group?s recommendation was further examined and it was felt that there is a need for incentivising the banks by way of the RBI itself paying a part of the leased rentals if banks connect their branches in the North Eastern States and underbanked districts in the rest of the country.
The banks should extend connectivity to rural branches through use of latest technology VSATs and other modes of terrestrial or fiber communication, wherever available.
While limited connectivity for the purpose of fast money transfer could be taken up as an immediate goal, the banks should plan for full-fledged branch connectivity to core banking or similar systems,in order to provide all services including mobile banking in future.