Citizens' Issues
Public Interest Exclusive
Soon, dedicated, point-to-point AC buses in Mumbai

Transport activists have welcomed the state government’s move saying that it would help in improving public transport and pave the way for the BRTS

Mumbai’s harried commuters can soon expect an easy travelling experience. The state government is planning to roll out air-conditioned (AC) point-to-point bus services from the commercial hubs like Bandra-Kurla Complex (BKC), Nariman Point and Parel to the suburbs. The scheme aims at discouraging car usage, especially single occupancy users. Transport activists have lauded the move calling it one step forward in improving public transport.  

Jagdeep Desai, a Mumbai-based transport expert, told Moneylife, “In-principle it is a good idea, providing easy commuting for the office goers. For such a service the thrust has to be on the frequency and timings. It has to be on par with office hours. There also needs to be a proper planning for the returning buses. Since the during office hours the buses will ferry the passengers to their destinations, on the return journey it will most likely be empty. Here fare reduction would be one way of attracting passengers.”

Another activist suggested that instead of all buses returning to bases, the same can act as shuttles in business areas until the end of each working day. For instance, there must be shuttles from Churchgate to Nariman Point and CST Station. Or Lower Parel to BKC or BKC to Andheri and vice-versa. The government should also learn from its earlier AC bus plan named ‘Limouzine’, by a private player, which was operational in the early 90s. Under this plan, dedicated AC buses were used to commute passengers to Nariman Point from the suburbs. The plan failed as there were few passengers or the bus was empty on the return journey and with Nariman Point as only business hub. However 20 years later the situation has changed with emergence of three other central business districts, namely—Lower Parel, Bandra, and Andheri, along with Nariman Point.  

Dr PS Pasricha, former deputy commissioner of Mumbai police (traffic) and also a PhD in traffic management told Moneylife that, “An average size of an AC bus is one and half times that of a normal car. If you are giving the option of comfortable AC bus to car users, then the problem congestion will also be solved. Such service is good for the point of view of congestion, pollution and also efficient considering the rising petrol prices.”

Chandrashekhar Burande, an architect who writes a blogs on Mumbai’s developmental issue says that, “In 2008 I had conducted a workshop on the need of quality public transport as the large population dependent on it. I am glad government is now thinking on these lines.”

Recently Maharashtra chief minister Prithviraj Chavan gave a nod to the scheme. The draft plan for the scheme is being prepared by the Mumbai Transportation Support Unit (MTSU) with the help of the Brihanmumbai Electric Supply and Transport (BEST) and the traffic police.  The quality AC buses under this scheme aims at providing comfortable commuting experience along with facilities such as coat hangers, laptop plug-in points, special handles, route maps, etc.

Currently, the BEST has 290 AC buses on 28 designated routes, which are incurring heavy losses. According to the MTSU draft plan, these routes need to be rationalized and some of them could also be converted to point-to-point services, as a pilot project.

Before launching the service, MTSU will carry out a survey to ascertain number of trips, routes, frequency of service and other information.  Based on the finding fare rates and the service plan will be finalised. MTSU has also planned to collect data, through a survey, from corporates and their employees. It plans to get the data from the corporate sector executives who are presently driving their own vehicles to work as well as other potential AC bus service users travelling from large housing colonies or the vicinity in present public transport.

Sudhir Badami, a transport activist, feels that such dedicated service could also pave way for Bus Rapid Transport System (BRTS). “The plan is good but they should ensure frequency and consistency to avoid drop out of commuters. In my opinion, when the affluent will start using it, they will definitely ask for these buses to come on priority. Hence the coming of BRTS and others services such as dedicates airport shuttle.”

In fact, Moneylife had campaigned to start a dedicated public bus transport with adequate luggage space to the Mumbai Airport. Moneylife Foundation, a not-for-profit organisation, drafted a memorandum with the help of experts on transportation, who unanimously supported the idea of starting an air-conditioned public bus service on a priority basis. The memorandum was sent to the BEST and to the state chief minister. Moneylife Foundation submits memorandum to BEST, CM appeals to start air shuttle for Mumbai Airport.

However, BEST instead of calling discussion on starting such project, has have ruled of any possibility of starting it. It also failed to address the core issue raised by Moneylife. BEST uninterested in starting airport shuttle service

Meanwhile, PTI reported a statement from CM’s office which said that, “Those interested in availing the services will have to go on  and fill an online form. Information regarding the new bus service is being provided to companies and corporate offices. Those interested in getting more information about the scheme will have to send their inputs on [email protected].”



Nagesh Kini

5 years ago

1. The BEST runs a ring service in South Mumbai CBD touching Nariman Point, Cuffee parade, Church gate and CST.

2. I had mailed the Maharashtra CM seeking an appointment to present Money Life memorandum on Airport Shuttle service. The reply in the forwarding the mail to MTSU was received within two hours. Eagerly await the call.

Sudhir Badami

5 years ago

For another viewpoint:

Adi Daruwalla

5 years ago

This is a fantastic idea and if implemented well will be a boon to decongest the business districts.
Also there is a good suggestion for intra day ferrying of passengers between CST, Churchgate to nariman Point and also Ballard Pier etc. One point missed is that the number of buses required would be huge and the parking bays required would be acres of land???? Will the services be every 15 minutes, then the load of public is handeled well, if less frequent then is of no use.



In Reply to Adi Daruwalla 5 years ago

In a land starved part of India, like Mumbai, reserved land not put to any use like Raj Bhavan in the case of South Mumbai, should be used for idle parking during the day.

Same was done in Delhi, by utilising land otherwise marked for memorials to departing leaders along the Jamuna, by re-naming it Millenium Depot and using it before the land grabbers could usurp it.


Nagesh Kini

5 years ago

This is exactly what the Bengaluru Vajra routes are doing. Nothing stops others like the one proposed for Mumbai having local-specific modifications for type and size of the vehicle, time flexibility etc.
It can surely succeed in a PPP mode when not just left to the babus BEST or other kind.


5 years ago

Point to Point needs timeline flexibility, and would work better on seat-sharing basis for selected routes using smaller public transport like 3-wheelers, taxiis and larger station wagon type people movers. Buses within city have to be operated as stage carriages, whether air-con or not, and for a succesful BRTS, need high frequency as well as sensible bus stops. As far as two-way traffic is concerned, Mumbai really doesn't have a uni-directional rush hour as it used to about 2-3 decades ago, in my opinion.

One more point - a certain number of standing pax must be allowed in air-con buses also, with due reservations for elderly, disabled and women.

Humbly submitted.

Nagesh Kini FCA

5 years ago

On reading the news reports in two leading news paper front pages, I emailed the Maharastra CM about MLF's memorandum on the airport shuttle a la Bengaluru, I got a email response within hours fwd. the mail to the officials concerned.
I only wish they pursue its implementation with equal fervour.

Hero MotoCorp to invest Rs2,575 crore in new plants, R&D centre

After ending its 26-year-old successful joint venture with Honda, the Munjal-family now want to pump more money into Hero MotoCorp for increasing production capacity, with an eye on R&D as well

New Delhi: Hero MotoCorp, India's largest two-wheeler maker on Monday said it will invest Rs2,575 crore to set up two new manufacturing plants in Gujarat and Rajastan and a research and development (R&D) centre by 2013-14, reports PTI.

"We have huge investment plans in various parts of the organisation. We will be setting up our fourth plant at Neemrana in Rajasthan," Hero MotoCorp managing director and chief executive officer Pawan Munjal told reporters.

The company will invest Rs400 crore for the Neemrana plant, which will have an installed capacity of 7.5 lakh units per annum. This plant will be commissioned in the first quarter of FY14, he added.

The fifth plant will be set up in Gujarat with an investment of Rs1,100 crore. This will have a capacity of 1.2 million units, he said, adding that the plant would be commissioned by the second quarter of 2013-14.

"Once the fourth and fifth plants are commissioned, our total manufacturing capacity will be over 9 million units a year from the current about 7 million units," Munjal said.

He added that the company will be setting up a research and development (R&D) centre with an investment of Rs400 crore at a 250-acre location near Jaipur in Rajasthan.

At present, the company produces 70 lakh units annually from its three manufacturing plants at Dharuhera and Gurgaon in Haryana, and Haridwar in Uttarakhand.

At present, the company is in the process of investing Rs500 crore in capacity expansion of existing plants. It has also earmarked Rs175 crore for various other investments.

Last year in August, while announcing its new brand identity in London, the company had said it would set up two new manufacturing plants in the country.

The company had said it is looking at $10 billion turnover in the next five years and sales of 10 million units with exports to be about 10% of its total sales.

In terms of investment, the company had said it would pump in more investments in the next five years than it had done in the its 27 years of association with Honda, in the erstwhile Hero Honda joint venture that stood at over $1 billion.

In December 2010, the Indian promoter of the company, the BM Munjal family had agreed to buyout the entire 26% stake of Honda in Hero Honda for Rs3,841.83 crore. It brought an end to a 26-year-old successful joint venture.


Economy & Nation Exclusive
Bank Business Correspondents: Miles to go

Banks needs to avoid appointing all and sundry as their business correspondents, just to meet internal or policy targets

The government in India has adopted a very important strategy to try and achieve financial inclusion, using business correspondents (BC) to serve and service excluded segments of the population, especially those living in rural areas. However, while this is yet to take off in any serious manner, of late we have witnessed greater activity in this area during the BC model being pushed as an alternative route to financial inclusion (vis-à-vis MFIs—microfinance institutions).  

While the idea of using BCs is perhaps appealing because of various benefits BCs may seem to provide, there are huge risks as well. This is especially true in the present environment in India, where there are many controversies with regard to financial services provided to low-income and excluded people, service delivery methods used, prices charged, etc, by the outsourced entities (such as BCs). As seen during 2010 and 2011, the new breed of micro-finance agents in India, who functioned almost like BCs, certainly created havoc in the lives of low-income people.

Therefore, it is imperative for regulators and supervisors to ensure that banks have an appropriate due diligence process in selecting their BCs. They must likewise ensure that banks avoid appointing all and sundry as their BCs, just to meet any (internal or policy targets) that may be imposed on them from time to time.

Specifically, the regulators and supervisors must encourage banks to develop a solid criteria that enable them to assess, prior to selection, a business correspondent’s capacity and ability to perform the various required activities effectively, reliably and most importantly, to a high standard, together with any potential risk factors associated with using a particular BC. Cost alone cannot be the deciding factor!

More importantly, the key emphasis must be on ensuring that the BC is indeed sensitive to the needs and situations of low-income clients and/or excluded segments of the population. Regulators and supervisors must also ensure that banks put in adequate client protection measures in the entire scheme of ‘outsourcing’ to BCs, and their on-site examination must verify the implementation of these in real time.

Among other things, such due diligence should include assessments with regard to the following (not exhaustive by any means):

a.    Whether the business correspondent is really qualified and interested in performing the specified tasks?
b.    Whether the business correspondent understands and can meet the objectives of the bank(s) in performing the specified activities?
c.    Whether the business correspondent has the financial soundness, managerial capacity and all other resources in adequate measure to fulfill the obligations and successfully perform the various (outsourced) roles and activities?
d.    Whether the business correspondent has the reach, resources and capacity to meet any special needs of the envisaged clients and/or the bank(s)?
e.    Whether the business correspondent has proposed a viable operational model to fulfill its obligations and specified tasks?

And given the above background, I was rather surprised to see that Vakrangee Finserve won “the SBI RFP to become the common Banking Correspondent company for all public sector banks operating in Maharashtra. … Vakrangee won the five-year contract, which can be extended by another two years, with a price of 0.48%. The company will now have to appoint BC agents in 4,200 locations in Maharashtra. … If things go as the finance ministry wants them to, welfare payments to the rural/poor population will be routed through Vakrangee now. …The low value of the final bid took some of the other bidders by surprise.” (The Economic Times, 25 May 2012 - Vakrangee wins Maharashtra RFP, becomes common BC for public sector banks in the state

Having spent over two decades in working with rural and urban poor, I must say that such a low value of the final bid is beyond any reasonable comprehension. If there is one thing that I have learnt through my work in over 540 districts in India and elsewhere globally, it is that servicing the rural poor is rather costly and it certainly has minimum costs associated with it. That said, I am really baffled as to how the bidder (Vakrangee Finserve) expects to provide the required quality of service at the (extremely low) bid cost?

What then are the implications based on lessons from past experiences in India and abroad of similar services being outsourced? There are four distinct aspects that need to be looked at with regard to such low cost bids of government/public services. And the RBI and other regulators shaping the financial inclusion agenda certainly have a responsibility to do so:

a)    How does the bidder gain cost advantages? Are these cost savings real or illusory? What is the real motivation of the bidder to bid for delivering the services in the first place?

For example, in other instances in India and abroad, companies have bid for large public contracts at extremely low (bid) prices Just to boost their credentials in the stock market—they have either abandoned the service and/or compromised severely on the quality of service provided after the stock manipulation objective has been achieved. Others have got a foot in the door (by winning the bid and extending the various services) and thereafter, have gone back for a revision of the contractual terms (including price) citing various reasons and loop holes. These are aspects that must be guarded against at all times by the RBI and other regulators concerned!  

b)    What about the quality of service? How is that (to be) maintained at minimum stipulated (quality) levels at all places? How can that be effectively monitored and ensured at all times during the service contract, especially given the remoteness of the rural locations?

For example, please see the proceedings of the meeting held under the chairmanship of the Haryana chief minister on 7th December, 2011 to review the implementation of Electronic Benefit Transfer Scheme and its convergence with Financial Inclusion Plan in Haryana. I quote from this report:

“The implementation at the ground level by the Business Correspondent appointed by the banks is not satisfactory. Non-availability of the BC agents at the field level tantamount to denial of banking service to senior citizens, destitute and disabled beneficiaries and their right to enjoy the benefit timely remittance into their bank accounts by the state government. The Director General, Social Justice & Empowerment informed that since the commencement of implementation from the month of April 2011, a total of Rs54 crore were disbursed manually using physical payee receipts through banks along with simultaneous enrolment for opening of bank accounts and another Rs504 crore was transferred into the bank accounts electronically up to 30 November 2011. In fact, as reported by the banks, an amount of Rs96 crore is still lying undisbursed as on 30 November 2011, though 80% of the total amount was released up to 12 August 2011. This shows that the infrastructure deployed by the business correspondent of the banks is grossly inadequate to provide a satisfactory level of banking service to the 2 million banking customers. Due to the uncertain and rare visit of the BC agent in the local area, there is no perception of banking service amongst the beneficiaries. The schedule of visits of the BC agent is uncertain causing inconvenience to the account holders. The average frequency of visit of the BC agent in the village has been once every 90 days and in some villages, there has been no visit at all in the last six months. An analysis of the transaction data supplied for a period of one month by the TSP indicates that the average transaction value is very high at Rs1,200 against the average monthly benefit of Rs615.

Other major problems encountered are non-operation of accounts; making manual payments using the department's E pay-order to banks, multiple accounts to the same person, not carrying out biometrics based de-duplication, Non establishment of customer complaint centers and non supply of transaction data for monitoring by the department.” (

All of these and similar issues need the attention of the Reserve Bank of India (RBI) and other regulators, especially when the bid is extremely low cost!
c)    Is there cause to believe that the bid is a front for some other (corrupt or illegal) activity?

In other countries, especially in Africa, such bid-based public services have served as the platform for carrying on other (illegal) activities. That again needs to be focused on by the RBI and other regulators.

d)    Will the low cost nature of the bid result in the poor and disadvantaged being further isolated?  

This is a very serious question that the RBI and other regulators need to be clear about upfront as if that is the case, or else the whole objective of financial inclusion would really be lost

Therefore, while the desire to enhance and speed up financial inclusion is much appreciated, such a drive should also have appropriate risk mitigation mechanisms and safeguards so that things do not go wrong during implementation. The lessons from the 2010 micro-finance crisis are still fresh in memory indeed. And as far as the present situation is concerned, while I am not pre-judging Vakrangee Finserve in any manner what-so-ever, we will have to wait and see what they actually do on the ground in terms of their BC operations and the quality of BC services offered there in. That said, the RBI and other regulators who are actively pushing the BC model, will certainly have to look into the critical issues highlighted above if indeed they are really serious about financially including much (if not all) of India’s rural poor…

(Ramesh Arunachalam has over two decades of strong grass-roots and institutional experience in rural finance, MSME development, agriculture and rural livelihood systems, rural and urban development and urban poverty alleviation across Asia, Africa, North America and Europe. He has worked with national and state governments and multilateral agencies. His book—Indian Microfinance, The Way Forward, is the first authentic compendium on the history of microfinance in India and its possible future.)



nitai chandra ray

5 years ago

The questions raised by Ramesh Arunachalam about BC should be
discussed threadbare at appropriate
levels for rural as well as urban inclusion for poverty alleviation programme .

a v moorthi besides TIHAR

5 years ago

It would have been nice if the situation for low bidding is not allowed and the Govt, RBI, NABARD and Banks have really thought of providing properly remunerating and supporting BCs instead of leaving the onus of pushing the BC model to BCs themselves and thus leaving them high and dry. just recall the out sourcing of un armed guards by Banks for ATM and branches. Banks were happy to get low costs ( even below proper renumeration meant for semi skilled workers as per various State Govt minimum wages rates meant for rates) so what happened was there is a labour inspector who was able to milk the agency supplying guards because the agency cannot pay guards as per minimum wages but at the same time the contract is so big the agency cannot afford to leave the contract. Similarly the engagement of BCs is clear admission of the fact RRBs and Dist cooperative Banks are failures and Commercial Banks with their wage structure will not find it viable to increase foot hold any further in under banked areas. only organisation which stand a chance of sucess is India Post which as on date has got deep penetration all over the country.


V Ramkumar

In Reply to a v moorthi besides TIHAR 5 years ago

India Post initially tried to become BC of banks but finally it has fizzled out. Inclusion of mainstream banks in providing financial access to the poor across the geography has been accepted as a must for FI. However, lack of understanding and efforts by stake holders - including NGOs /development institutions - in supporting the BC model is the real challenge.

V Ramkumar

5 years ago

We have seen MFI route reaching out to a miniscule of the needy population that too at a very high cost . For achieving an enlarged and deepened FI coverage in a reasonably quick time, the BC route is the only way when financial services can be accessed by poor at the rate at which Banks charge for their services. However, lot of reluctance is seen in accepting this reality by those who have experience in this sector and they want to beat around the same MFI route in some form or other. This has hampered the BC model coming up.
The irony is that only now GOI has felt the need for the BC model to be pushed as an alternative route to financial inclusion.
There will always be some teething problems and what is called for is the coming together of all brains as to how to make the BC model more viable instead of picking holes in any effort begun. This RFP also has undergone the due diligence process. It would have been nice if the situation for low bidding is not allowed and the Govt, RBI, NABARD and Banks have really thought of providing properly remunerating and supporting BCs instead of leaving the onus of pushing the BC model to BCs themselves and thus leaving them high and dry. "BC model is not viable" is the common refrain of those who do not want this model to be viable so that MFI's interest can be protected.


Ramesh S Arunachalam

In Reply to V Ramkumar 5 years ago

Dear Sirs, All of your points are well taken. Thanks

I wanted to make two simple points in the article:

a) Low cost bids have the potential to become counter productive later as the obligations may not be discharged and/or may be discharged partially or ineffectively. The RBI needs to take care and ensure that this does not happen

b) Financial inclusion is a great policy initiative but it must not degenerate into improper, ineffective and/or fraudulent implementation (of policy initiatives). This again needs to be ensured by the RBI

Thanks again for your comments and the points are well taken

V Ramkumar

In Reply to Ramesh S Arunachalam 5 years ago

Appreciate your reply and the focus of the article as also the sincerity/merits of them.

Looking for exclusive research papers/ articles to suggest ways on "how to make BC model viable" and what every stake holder should do to make it, instead of every one waiting for others, except themselves to make this,
with utmost regards

Ratanlal Purohit

5 years ago

The financial inclusion is our social obligation. Its an investment to include all deprived to uplift poverty. Dont forget demographic divident.
We are writing off big defaulters. Farmers. Let's empower the real produceres of wealth.
It is our Social obligation.

Ramesh S Arunachalam

5 years ago

Very well said and the RBI cannot afford be as laizze faire as it did in the case of Micro-Finance.

Telcos as BCs have their advantages and disadvantages and the RBI must again be careful that weaknesses and non serious players do not spoil the financial inclusion agenda.

Very interesting to hear committed bank staff being given incentives to take banking to remote areas. That is an option we need to try seriously as it has a lot of merit. There have been other such experiments in India and Africa and they need to be looked into as well

Thanks again for your comments

Warm regards



5 years ago

Several companies are entering the BC space with the hope to cross sell products/services to rural India, often forgetting that financial services is a different ball game. Once they realize the difficulty in operations, they pull out of these areas, leaving the customer unserviced, thus creating a bad name for the industry. The repercussions of uninterested parties not meeting their mandates are multifold. The RBI should intervene before people start to disregard such financial inclusion projects.

Ratanlal Purohit

5 years ago

What happened to mobile banking. MOBILE COMPANIES AS BCs. And their agents in villages.
Alternatively Post Offices for microfinance.

R Murugan

5 years ago

In the seventies and eighties Andhra Bank had a unique system called cluster banking where a group of villages was attached to a branch and the Cluster Manager used to visit village/s once week (or more than once a week) depending on the volume of transactions and transactions of the day would be recorded in the books of the base branch by the end of day. Now with computerisation it should be easier to record transactions. Staff working in these branches would travel by van to different villages and they can be given incentives/concessions in pay/promotions to motivate them to opt for these services. This would be a better option than BCs who can not be expected to deliver since they would lack commitment and sincerity, not being permanent employees of Banks.

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