The Hindu Business Line : Soon, shopowners and teachers will turn ‘bankers’

Mumbai, Aug.19 Individuals such as shop owners, PCO operators, petrol pump owners, retired teachers and members of self-help groups will soon be able to offer services as banking correspondents, as per recommendations of a Reserve Bank of India Working Group.

According to the current guidelines, NGOs or micro finance institutions set up under Societies/Trust Acts, societies registered under Mutually Aided Cooperative Societies Acts or the Cooperative Societies Acts of States, Section 25, companies, post offices, retired bank employees, ex-servicemen and retired government employees can act as banking correspondents (BCs) of banks.

BCs are allowed to conduct banking business as agents of banks at places other than the bank premises.

In recent times, there have been demands to increase the number of entities eligible to act as BCs as this would help the banking system increase its outreach.

In the Annual Policy 2009-10, the RBI constituted a Working Group to review the Business Correspondent Model.

The report of the Working Group, released on Wednesday, said that banks would need to accept the BC model as extremely vital for achieving the goals of financial inclusion.

For full range of activities

The group noted that BCs should be used not only for opening and servicing no-frills accounts but for the full range of financial activities.

Ideal medium

Further, with the government planning to route various government payments through the banking system, BCs could be the ideal medium for banks to handle the huge volumes of low-value transactions, the report said.

The BC model, coupled with technology solutions, could help banks substantially increase their outreach, facilitating financial inclusion, the report added.

Service charges

Banks should also be permitted to collect reasonable service charges from customers for delivering services through BCs. This can help improve the long-term viability of the BC Model, the group said.

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