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Mrunal [Economy] Banking Business Correspondents Agents (BCA): Meaning, functions, Financial Inclusion, Swabhimaan, Common Service Centres
[Economy] Banking Business Correspondents Agents (BCA): Meaning, functions, Financial Inclusion, Swabhimaan, Common Service Centres (CSC)
1. 2. 3. 4. 5. 6. 7.
What is financial inclusion? Why Business Correspondents system? Who/What is Business correspondent? Who can become Business correspondent for Banks? Functions of Banking Business Correspondents? Swabhimaan Reforms in BC model 1. Common BC 2. NREGA payment 3. Kiosk Banking 8. BCA for Direct Cash Transfer? 9. Mock questions
1969
2005
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Mrunal [Economy] Banking Business Correspondents Agents (BCA): Meaning, functions, Financial Inclusion, Swabhimaan, Common Service Centres
2006
No profit
Because Administrative costs will be high= Building rent, telephone, electricity, staff salary, security guards. On the other hand volume of business is very low in village areas=amount of money deposited, loans taken. Means there is No profit. Actually itll lead to heavy losses.
Reluctant staff
In many villages, there is no electricity, no good schools/drinking water, naxalite problem= Bank staff doesnt want to serve there. Therefore banks dont like to open branches below district HQ or Tehsil level. Now comes the problem
Ultimately
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Mrunal [Economy] Banking Business Correspondents Agents (BCA): Meaning, functions, Financial Inclusion, Swabhimaan, Common Service Centres
1. Banks We cant open branches @every village, because its not profitable. 2. poor We cant make trip to nearest town to access banking facilities, people because it is inconvenient. So, whats the solution? How about a middleman / agent between banks and the poor people?
2/9/13
Mrunal [Economy] Banking Business Correspondents Agents (BCA): Meaning, functions, Financial Inclusion, Swabhimaan, Common Service Centres
Swabhimaan
Initiative by the Finance Ministry + Indian Banks Association launched in 2011 To bridge economic gap between rural and urban India.
Objectives
Make banking facilities available to every habitat with a population >2000 (by March 2012.) Banks will provide basic services like deposits, withdrawal, Kisan Credit Card (KCCs) etc via Business Correspondents (BCs) also known as Bank Saathi. Banks will also working together with the Unique Identification Authority of India (UIDAI) for opening new bank accounts. Government will send subsidies and social security benefits (pension etc.) directly to beneficiarys account. Beneficiary can withdraw the money from the Business Correspondents (BCs) in their village itself. Government has provided 500 million rupees to banks for taking these ^initiatives.(e.g. paying Commissions to Bank Saathi, their training cost, doing paperwork with UID.)
NREGA payment
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Mrunal [Economy] Banking Business Correspondents Agents (BCA): Meaning, functions, Financial Inclusion, Swabhimaan, Common Service Centres
Old system
1. A villager earns some cash under MNREGA. 2. Government gives cash to bank. 3. Bank gives it to B.C. 4. B.C. deposits it into MNREGA workers account.
New system
1. All accounts will be maintained by core banking system. 2. So, cash directly goes from Government > Bank >MNREGA workers bank account. 3. Villagers will have the freedom to make their withdrawals from any BC they choose.
Kiosk Banking
The D.I.Y. (Do it yourself) banking services e.g. ATM, internet kiosks = still expensive. There is also lack of education + awareness in rural areas about such things. So even if Government /bank installs such automatic ATM, internet kiosks=> most of the time they just gather dust. Therefore, technology-based self-service model (e.g ATM, internet kiosks) is not useful at this stage. And hence we need Personnel (these Business Correspondents=middlemen). Because often villagers are illiterate, so they cant even fill up the forms for opening bank accounts or loan-application or filling the deposit slips etc. Business Correspondents are essential at this stage. But again problem: The cost per transaction remains high. (Because Bank has to pay commission to B.C.agent.) Therefore, Chindu has suggested following solution for long term: Migrate from banking correspondent model to Kiosk banking = mobile vans fitted with ATM machines+ biometric devices. Theyll provide banking services in remote areas.
2/9/13
Mrunal [Economy] Banking Business Correspondents Agents (BCA): Meaning, functions, Financial Inclusion, Swabhimaan, Common Service Centres
covered under banking services. Therefore, recently Chindu asked the banks to have at least one bank branch or business correspondent agents (BCA) for every village or group of villages with 1,000 to 1,500 households. In the villages without BCA, Department of Electronics and Information Technology will install Common Service Centre (CSC). This CSCs will serve as the BCA. Right now, CSC will used only for opening new accounts of beneficiaries under the scheme for direct cash transfer. Only after banks install the software and complete other technical requirements for cash transactions, the CSC will allow villagers to withdraw cash from their accounts.
Mock questions
MCQs
Q1. Financial inclusion involves 1. 2. 3. 4. 5. Covering rural poors in banking net. Covering urban poors in banking net. Providing jobs to poor people. Providing vocational training to poor people. Spreading banking awareness among poor people.
Ans.choices a. b. c. d. Only 1, 3 and 5 Only 1,2 and 5 Only 3 and 4. All of them
Q2. Find incorrect statements about Swabhimaan scheme 1. It was launched by the Ministry of Social justice in 2009. 2. It aims to provide insurance coverage to laborers in unorganized sector. 3. It aims to provide financial inclusion to people residing in remote areas of India. Ans a. Only 3 b. Only 1 and 2 c. Only 2 and 3
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Mrunal [Economy] Banking Business Correspondents Agents (BCA): Meaning, functions, Financial Inclusion, Swabhimaan, Common Service Centres
d. Only 1 and 3 Q3. Who among the following, is/are eligible to become Business correspondents for banks? 1. 2. 3. 4. Ans a. b. c. d. Only 1 and 2 Only 2 and 4 Only 2 and 3 All of them. Post office Panchayats NGO and Insurance Agents Self Help Groups (SHG)
Descriptive Questions
1. 2. 3. 4. 5. Swabhimaan (5m) Swavalamban (5m) Common Services Centers scheme (5m) Write a note on National E-governance Plan (NeGP) (10m) Define Financial inclusion. Discuss the initiatives taken to achieve financial inclusion. (15m)
Interview
1. Apart from what is already being done, what new initiatives should be taken to achieve 100% financial inclusion?
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