The State Bank of India (SBI) plans to expand the reach of its cash deposit machines (CDMs) across the country to tap the portion of cash in the system (currency with people).

 As per the Reserve Bank of India (RBI) data, this amount stands at Rs. 11,64,450 crore as on September 6, 2013.

 'Approximately 10 per cent of the economy is cash with people. So, if a part of that cash comes back into the system, I think, that itself puts more resources with the banks and the country would benefit,' said Pratip Chaudhuri, SBI Chairman, in an interaction with The Hindu.

 Today, bank branches close at 4 or 5 p.m. whereas most of India’s retail trade happens in the evening. 'No matter how much you promote cards and all that, 70-80 per cent of this trade is in cash, especially the street-level shops. So, banks need to have the ability to set up cash deposit machines,' Mr. Chaudhuri added.

 Explaining the generic character of markets in the country, Mr. Chaudhuri said: 'Take the case of vegetable markets. They open in the morning. Whatever settlement happens among the vegetable traders, they settle it by 9 a.m. and go home. But bank starts at 10 am, what does he (trader) do? So, if somebody has collected Rs. 5 lakh by selling fruits and vegetables, he can deposit the money in a cash deposit machine.'

 'We have done it in a big way. We have installed about 2000 CDMs in the last one year, and they have been extremely useful,' he added.

Location-wise, SBI has planned CDMs in areas where there is a market. Very surprisingly, said Mr. Chaudhuri, 'there is a machine in Kharagpur, which collects more than something in Kolkata. Though the Kolkataeconomy is much bigger, our people have very thoughtfully put a machine in a vegetable market in Kharagpur.' The average collection per machine per day is at around Rs. 4 lakh.

 Mr. Chaudhuri said SBI’s CASA (current account and savings account) deposits stood at 44 per cent 'because we are delivering value. You can’t ask somebody, you deposit money with us, I’ll pay you low interest because I want you.'

 'We have very creatively repositioned deposits as unfixed deposits. For higher value, people are looking for liquidity. If they are putting deposits for two months, what happens if they suddenly need liquidity? We have said that after seven days you can take away the deposit, no pre-payment penalty will be levied. According to me, the deposit will get converted into a current account after seven days,' said Mr. Chaudhuri.

 The SBI Chairman also criticized the regulator’s move to change the ‘bulk deposits’ from Rs. 25lakh and above to Rs, 1 crore and above. 'Earlier beyond Rs. 25 lakh was a bulk deposit. Suddenly, they changed it to Rs. 1 crore. Why Rs. 1 crore? Even beyond Rs. 25 lakh is not retail. A common person doesn’t put a Rs. 25 lakh fixed deposit.  So, allow us to compete. Allow us to give a better rate above Rs. 25 lakh. Because by doing this, I’m missing out on the Rs. 25 lakh to Rs. 1 crore segment.'

 He also made a pitch for 3-day deposits. 'Why don’t you allow us? 3-day deposit does not have any revenue implications.'