Scheme for Financial Inclusion

Financial inclusion is a method of offering banking and financial services to the economically underprivileged sections of society. The Indian Government has introduced various schemes for financial inclusion, which are being effectively implemented through Business Facilitators and Business Correspondents. This article looks at the scheme for financial inclusion in detail.

Business Correspondents

Business correspondents are bank representatives who help villagers in opening bank accounts. Business Correspondents get a commission from the bank for all new account openings, performing the transaction in the account, processing loan application etc.

Eligibility Criteria for Business Correspondent

The following entities are considered as eligible Business Correspondents (BCs) for the banks:

Non Governmental Organisations (NGOs) or Microfinance Institutions (MFIs) established under the Indian Societies or Trusts Act.
Societies registered under the Cooperative Societies Acts of States or Mutually Aided Cooperative Societies (MACS) Act.
Companies enrolled under section 25 of the Companies Act in which Non-Banking Financial Companies (NBFCs), banks, telecommunication companies and corporate entities or their holding companies do not have equity holdings of above 10%.
Post-Offices Department.
Any retired bank employees, government employees, ex-servicemen.
Any individual /medical/shop owners.
Any individual Public Call Office Operators (PCO).
Any individual who owns petrol pumps.
Any authorised Self Help Groups (SHGs) linked to the bank.
Any retired professors.
Agents of small savings scheme (Indian Government or insurance companies).

Activities by Business Correspondent

The scope of activities conducted by the Business Correspondent includes the following:

Opening of no-frill accounts and other products (as permitted) by leveraging technology.
Receipt and delivery of payment that does not exceed INR 10,000 per transaction.
Payment of deposits and withdrawals limits of not more than INR 10,000 per transaction.
Acceptance or deliverance payment of INR 10,000 per customer (can be performed by the business correspondent or his agent).
Furnishing of account statements and other account details.
Recovery of principal or collection of interest with respect to borrower accounts.
Any other service processed by the business correspondent on behalf of the bank, duly authorised by the concerned authority.

The activities undertaken by the Business Correspondents has to be conducted by the entities at places other than the bank’s premises. In respect of all transactions, the Business Correspondents will be authorised to accept or deliver payments either at their workplace or at any convenient location. The main objective of employing Business Correspondents is the extension of savings and loan facilities to the underprivileged sections. These Business Correspondent models should not be utilised for collecting Non-Resident Rupee (NRE) /Non-Resident Ordinary Rupee (NR(O))/ Foreign Currency Non-Resident Bank (FCNR(B)) deposits which are generally of significant value.

Business Facilitator

Business Facilitators are empowered to refer clients, pursue the client proposal and facilitate the bank to carry out its transactions, but cannot transact on behalf of the bank.

Eligibility Criteria for Business Facilitators

The following entities are eligible business Facilitators (BFs) for the banks.

Non Governmental Organisations (NGOs) registered under the Indian Trusts Act.
Self Help Group (SHGs) registered under the Societies Act.
Farmer’s Clubs.
Functional Cooperatives Co-operative Societies Act.
Community-based organisations.
IT-enabled rural outlets of corporate entities.
Panchayats.
Rural Multipurpose kiosks, Village Knowledge Centres.
Agri Clinics, Agri-Business Centres.
Krishi Vigyan Kendras.
Khadi and Village Industries Commission (KVIC) and Khadi and Village Industries Board (KVIB) units.
Post-Offices Department.
Social Organisations.
Insurance Agents.
Any retired teachers or postmasters.
Individuals such as auto dealers, postal agents, insurance agents of private insurance companies (IRDA certified).
Any retired bank employees, government employees, ex-servicemen covered under the National e-Governance Plan (NeGP).
Any bank employees who have retired on superannuation program.
Any Association of Mutual Funds in India (AMFI) Certificate holders.
Primary Agricultural Societies(PACs).
Any individual /medical/ shop owners.
Any individual Public Call Office Operators (PCO).
Agents of small savings scheme by Indian Government or insurance companies.
Any individual who owns petrol pumps.
Any other entity, as specified by the Reserve Bank of India (RBI) from time to time.

Activities by Business Facilitators

The scope of the activities conducted by Business Facilitators are as follows:

Performing non-financial business activities and identifying potential customers and their activities.
Collecting and processing loan applications and account opening forms for deposits including verification of details.
Filling loan applications and account opening forms, including nomination and submission to the Bank.
Cross-selling other financial products such as insurance, mutual fund products, pension products and any other third party products.
Assisting in post-sanction monitoring and follow-up for recovery agents.
Promoting Self Help Groups (SHGs) or Joint Liability Groups (JLGs), wherever relevant.
Creating awareness of savings and other products.
Educating and advice on managing money and debt counselling.

As the main objective of permitting the bank to use Business Correspondent is to extend savings and loan facilities to the underprivileged sections, these Business Facilitators models should not be utilised for collecting Non-Resident Rupee (NRE) /Non-Resident Ordinary Rupee (NR(O))/ Foreign Currency Non-Resident Bank (FCNR(B)) deposits which are generally of significant value.

Security Deposit

The prescribed amount of security deposit or bank guarantee will be obtained from the selected Business Facilitators and Business Correspondent based on the business category.