Financial inclusion (FI) by way of access to formal financial system is of critical importance for economic upliftment of the common man. With the objective of ensuring greater financial inclusion and increasing outreach of the banking sector, Reserve Bank, in January 2006 permitted banks to use intermediaries as Business Correspondents (BC) for providing financial and banking services.^ The BC model has the potential to speed up the process of financial inclusion and bring the vast majority of population within the banking fold. The process of financial inclusion involves the three critical aspects of (a) access to banking markets, (b) access to credit markets and (c) financial education. The BC model encompass each of the above three aspects & is able to address the issue of financial inclusion in a holistic manner. The benefits arising out of adopting the BC model and implementing the same with missionary zeal is to achieve the ultimate goal of financial inclusion. The BC model brings in the advantage of its outreach through its distribution network in unbanked areas to offer Banking services to the society. It caters to the banking needs of the most far-flung areas and remote locations in India. Business Correspondents are permitted to carry out transactions on behalf of the bank as agents, refer clients, pursue the customer’s proposal and facilitate the bank to carry out its transactions. BC model reduces customer acquisition costs by reducing burden of KYC. It facilitates condition for development of a credit bureau for the poor. BC model also augments governments policy to open ‘No Frills Accounts’ and to process Government payments (G2P) such as the National Rural Employment Guarantee Scheme, Pensions and other social payments. It also acts as a model for the Corporate Social Responsibility (CSR) activity. Hence the growth and the successes of the BC model is very vital for achieving financial inclusion in India.
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