Financial Inclusion by Extension of Banking Services – Use of Business Correspondents (BCs)
THE Reserve Bank of India wants banking facilities to reach the maximum number of people. And banks need not open branches in all inaccessible places to make banking services available to more people. They can use the services of
(i) Individual kirana/medical /fair price shop owners
(ii) Individual Public Call Office (PCO) operators
(iii) Agents of Small Savings schemes of Government of India/Insurance Companies
(iv) Individuals who own Petrol Pumps (v) Retired teachers and
(v) Authorised functionaries of well run Self Help Groups (SHGs) linked to banks.
RBI has suggested:
+ The BC model can succeed only if the banks own up the BCs as their agents.
+ The range of services to be delivered through the BC should be ramped up to include suitable small savings, micro-credit, micro-insurance, small value remittances etc. (Paragraph 3.29)
+ Banks may be permitted to collect reasonable service charges from the customer, in a transparent manner, for delivering services through the BC model.
+ Banks may bear the initial set up cost of the BCs and extend a handholding support to the BCs, at least during the initial stages. Banks may also need to bear the costs relating to transit insurance of the cash handled by BCs.
+ In order to improve the viability of the BC model, banks may consider providing reasonable temporary overdrafts to the BCs free of interest charges.