BUSINESS CORRESPONDENTS (BCs)

May 6, 2019

Business correspondents (BCs) operating in the Direct Benefit Transfer (DBT) scheme and other banking services are finding it tough to operate due to reduction in fees and unaffordability of the Aadhar enabled payment system (AEPS).

About:

Who are they? Business correspondents are retail agents engaged by banks for providing services at locations other than a bank branch or an ATM.
Permitted services include: identification of borrowers, collection and preliminary processing of loan applications, collection of small value deposit, disbursal of small value credit, sale of micro insurance, MF products and pension products.
History: In 2006, RBI issued guidelines for engagement of BCs by banks for providing banking and financial services.
Who can act as BCs? The RBI has provided a long list of entities and persons who can act as BCs.
- Some of these are NGOs/ MFIs set up under Indian Societies/ Trust Acts (excluding non banking financial companies (NBFCs)), Societies registered under mutually aided co-op. societies (MACs) Act or the Coop. Acts of States, Section 25 companies, Post Offices, Individual kirana/ medical/fair price shop owners etc.
- In June 2018, Union government announced that all 2.9 lakh common service centres (CSCs) in the country will operate as business correspondents of banks.