What is Business correspondent?
- Business correspondents are bank representatives.
- They help villagers to open bank accounts.
- They help villagers in banking transactions. i.e. deposit money, take money out of savings account, loans etc.
- They carry a mobile device.
- The villager gives his thumb impression or electronic signature, and get the money.
- Business Correspondents get commission from bank for every new account opened, every transaction made via them, every loan-application processed etc.
Why are they used/employed?
- It is not economically viable to open bank branches in remote areas. So, in such areas BCs are used.
- In 2009 RBI directed lead banks to ensure coverage of all villages with a population of 2000 or more, either through a BC or a bank branch led to its widespread growth.
Did BCs led to financial inclusion in real sense?
Findings of a recent report gives mixed signals:
- Significant increase in savings of both landless as well as landowners
- Women were the biggest beneficiaries after the tie up of MNREGA and financial inclusion drives
- However the benefit to landholders were much more than to the landless and marginalized
- Poor households usually pay their debts taken from informal channels so there savings is insignificant for such households
- Borrowing taken by such households mainly owe to factors like health problems, purchase of agricultural products etc.
- Also the benefits of presence of BCs are more in villages with larger population to that of villages with smaller populations