Initially the entities permitted to act as BCs included NGOs/ MFIs set up under Societies/ Trust Acts, Societies registered under Mutually Aided Cooperative Societies Acts or the Cooperative Societies Acts of States; Section 25 companies and post offices. As regards Section 25 companies, it was subsequently clarified that banks can engage such companies as BCs provided the companies are stand-alone entities or Section 25 companies in which NBFCs, banks, telecom companies and other corporate entities or their holding companies do not have holdings in excess of 10%.
The list of persons who can be engaged as BCs was further expanded to include individuals like retired bank employees, retired teachers, retired government employees and ex-servicemen, individual owners of kirana / medical /Fair Price shops, individual Public Call Office (PCO) operators, agents of Small Savings schemes of Government of India/Insurance Companies, individuals who own Petrol Pumps, authorized functionaries of well run Self Help Groups (SHGs) which are linked to banks. Any other individual including those operating Common Service Centres (CSCs) are also allowed to act as BCs of banks.
Customer can access his account through BC agents or Customer Service Points, USBs, Kiosks, etc. appointed by the BC for servicing the customers.
Non-Banking Finance Companies (NBFCs) were not allowed to be appointed as BCs by banks. However the RBI has now permitted to engage non-deposit taking NBFCs (NBFCs-ND) as BCs, subject to the following conditions:
With the objective of ensuring greater financial inclusion and increasing the outreach of the banking sector, in Jan 2006 based on the recommendations of Khan Commission, the Reserve Bank of India issued a new set of guidelines allowing banks to employ two categories of intermediaries - Business Correspondents (BCs) and Business Facilitators (BFs) - to expand their business. According to the guidelines scheduled commercial banks including Regional Rural Banks (RRBs) and Local Area Banks (LABs) have been permitted to use the services of intermediaries in providing financial and banking services throughout the country and even in remote areas.
In this model BCs are permitted to carry out tractions on behalf of the bank as agents, the BFs can refer clients, pursue the clients' proposal and facilitate the bank to carry out its tractions, but cannot tract on behalf of the bank. Recently Reserve Bank of India (RBI) has permitted all Business Correspondents (BCs) working for one particular bank; perform business for other banks too.
As reported by the banks under their financial inclusion pl nearly 2,48,000 BC agents had been deployed by banks as on March 31, 2014 which are providing services through more than 3,33,000 BC outlets. Nearly 117 million basic saving bank deposit accounts (BSBDAs) opened through BCs remained outstanding as on March 31, 2014.
Banks may formulate a policy for engaging Business Correspondents (BCs) with the approval of their Board of Directors. Due diligence may be carried out on the individuals/entities to be engaged as BCs prior to their engagement.
The due diligence exercise may, inter alia, cover aspects such as
With a view to ensuring adequate supervision over the operations and activities of the retail outlet/sub-agent of BCs by banks, every retail outlet/sub-agent 8 of BC is required to be attached to and be under the oversight of a specific bank branch designated as the base branch and the distance between the place of business of a retail outlet/sub-agent of BC and the base branch as stipulated by RBI earlier was not more than 30 kms in rural, semi-urban and urban areas and 5 kms in metropolitan centres. However the RBI has now removed the distance criteria.
The following Business Correspondents are listed based on the primary information received from them:
Technology Providers for BCBF Model :
Under the "Business Facilitator" model, banks may use the services of intermediaries such as:
The BC remuneration consist of fixed and variable component which is commission based.
BCs are permitted to perform a variety of activities which include identification of borrowers, attend to collection of small value deposit, disbursal of small value credit, recovery of principal / collection of interest, sale of micro insurance/ mutual fund products/ pension products/ other third party products and receipt and delivery 7 of small value remittances/ other payment instruments, creating awareness about savings and other products, education and advice on managing money and debt counseling, etc.
The BC uses Information and Communication Technology (ICT) based devices such as handheld machines, smart card based devices, mobile phones, etc. to carry out the banking tractions.
Some of the advantages in using BCs as listed below:
BC is a mode of providing banking service at the doorstep as bank branch is at a distant area. Depositing money with BC is as good as depositing with a bank branch. The tractions are done through the ICT based devices and accounted in the books of the banks through online mode o real time basis. The customers get immediate verification of their tractions as cash deposited / withdrawn by customers through the BC is acknowledged by issue of a receipt on behalf of the bank. Additionally, tractions through BCs are done on the basis of our biometrics or a PIN number and thus no one else can do the tractions in our account.
Business Correspondents are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM. Basically, BCs enable a bank to expand its outreach and offer limited range of banking services at low cost. BCs, are an integral part of a business strategy for achieving greater financial inclusion.
The following products are offered through the BC Channel :