Financial Inclusion and Business Correspondents

With the objective of ensuring greater financial inclusion and increasing the outreach of the banking sector, RBI decided in public interest to enable banks to use the services of NGO’s / SHGs and Micro Finance Institutions (MFIs) as intermediaries in providing financial and banking services through the use of Business Facilitator and Correspondent.

Business Correspondent

Under the 'Business Correspondent' Model, NGOs/ MFIs set up under Societies/ Trust Acts, Societies registered under Mutually Aided Cooperative Societies Acts or the Cooperative Societies Acts of States, In engaging such intermediaries as Business Correspondents, banks should ensure that they are well established, enjoying good reputation and having the confidence of the local people. Banks may give wide publicity in the locality about the intermediary engaged by them as Business Correspondent and take measures to avoid being misrepresented.

Roles of a Business Correspondent – 
  • Business correspondents are bank representatives.
  • They help villagers to open bank accounts.
  • They help villagers in banking transactions. (deposit money, take money out of savings account, loans etc.)
  • The Business Correspondent carries 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 transection made via them, every loan-application processed etc.
The arrangements with the Business Correspondents shall specify: 
  • Suitable limits on cash holding by intermediaries as also limits on individual customer payments and receipts.
  • The requirement that the transactions are accounted for and reflected in the bank's books by end of day or next working day.
  • All agreements/ contracts with the customer shall clearly specify that the bank is responsible to the customer for acts of omission and commission of the Business Facilitator/ Correspondent.

Redressal of Grievances in regard to services rendered by Business Facilitators/ Correspondents 
  • Banks should constitute Grievance Redressal Machinery within the bank for redressing complaints about services rendered by Business Correspondents and Facilitators and give wide publicity about it through electronic and print media. 
  • The name and contact number of designated Grievance Redressal Officer of the bank should be made known and widely publicized. The designated officer should ensure that genuine grievances of customers are redressed promptly. 
  • The grievance redressal procedure of the bank and the time frame fixed for responding to the complaints should be placed on the bank's website.
  • If a complainant does not get satisfactory response from the bank within 60 days from the date of his lodging the compliant, he will have the option to approach the Office of the Banking Ombudsman concerned for redressal of his grievance/s.

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