Introduction:When a bank finds it difficult or, unprofitable to open a branch in far-off areas (rural areas) then it appoints a person i.e. Banking Correspondent (BC) to provide basic banking services for the rural population.
Now a day in 21st century also, approximately more than 50% of our population are still classified as ‘unbanked or, under-banked’. The main reason for this issue is lack of connectivity in rural areas, security concern, lack of awareness of people and also it will be unprofitable for banks. Access to basic financial services is still a major challenge in our country. After recognizing this problem RBI introduced a regulation in 2006 i.e. to provide basic banking services at people’s door step by appointing a Banking Correspondent (BC). It is also called as Business Correspondent.
What is Banking Correspondent (BC)?Banking Correspondents are authorized representative individuals of a bank. They are appointed to provide basic financial services to the people like cash transaction (both deposit and withdrawal) using micro ATMs, they also facilitate fund transfer.
Banking Correspondent carry a mobile device i.e. micro ATM with them for cash transaction, money transfer, account opening etc. with the help of swiping the debit card or, by fingerprint scanning.
The BC also engages in:
- To identify the borrower.
- Collection and preliminary processing of loan applications including verification of primary documents.
- Creating awareness among the people about savings and education.
- Educate the villagers about how to manage money.
- Processing and submission of loan application to banks.
- Post sanction monitoring.
- Follow-up recovery.
- Sale of micro insurance and pension products.
- Recovery of principal and collection of interest.
- Helps people in opening account.
Who can become Banking Correspondents?
- Retired bank employees.
- Post offices.
- Non-Governmental Organisations.
- Self Help Groups.
- Retired teachers and retired government employees.
- Individual owners of Medical shop, Kirana shop etc.
- Co-operative Society.
- Companies registered under companies act 1956, excluding Non-Banking Financial Companies (NBFCs).
- To facilitate basic banking services to each and every section of society.
- Deposit, Withdrawal, Account Opening, Fund transfer, Kishan Credit Card (KCC) etc. can be availed at our door step via Banking Correspondent.
- It will also help to people in Aadhar Seeding (Linking bank accounts with Aadhar number).
- Door step banking.
- People can avail loan at reasonable rate of interest.
- Government will transfer the subsidies directly into each accounts, this will reduce the corruption of the middleman.
- It will increase the habit of savings among people.
- Money of each individual will be safe and secured.
- There will also be an option to avail insurance schemes and pension schemes in rural areas.
Conclusion:Banking Correspondent scheme will help people in connecting with the financial world; also they will increase the habit of savings. This will increase the deposits in banks. So, here it’s a win-win situation for both bank as well as people. It will also give a boost to Financial Inclusion.
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