Page 40 - Banking Finance June 2022

ARTICLE

Aadhar based services ATM. BCs enable a bank to provide a limited range of
banking services at low cost and are hence, instrumental in
Financial literacy
promoting FI. They will provide banking service at a
Empowerment of women
designated places or their own locations based on their
Direct benefit transfer convenience.
Insurance and Pension services
Banks usually go through a process of RFP (Request For
Proposal), to appoint corporate BC at apex level. This will
Establishment of brick and mortar branches is an expensive
be taken care by central offices of banks. Banks have
arrangement due to high capital expenditure which causes
established financial inclusion departments to look after
serious concern on profitability of the banks. So banks are
overall financial inclusion implementation.
in search of other alternatives to establish a win - win
situation where in financial services shall be made available
Either by capex or opex model bank will choose corporate
at door steps in unbanked /under banked locations at an
BC. The corporate BC will in turn appoint individual business
affordable cost without establishing regular branches. ICT
correspondents to serve at desired locations.
(Information and Communication Technology) has made the
job easy.
Corporate BC will enter an agreement with bank to provide
services on commission basis.
Different models which different banks have
adopted are as follows,
Issues faced by banks while scaling up of BC
1. Business correspondent model
model:
2. Bank Mitra model
At Corporate BC level:
3. Customer Service provider (CSP)model
Delayed procedures in appointments of corporate BCs
4. Kiosk model etc.,
Inadequate experience of corporate BCs
Inadequate procedures to appoint honest BCs in field
Out of the above said models most of the PSBs using
Business correspondent model to implement Financial Low commission earnings
Inclusion.
In active BCs
Technology support
Business correspondent model: Business Correspondents
(BCs) are retail agents engaged by banks for providing Infrastructure issues
banking services at locations other than a bank branch or
Training issues
Handling multiple services of different banks

i. Delayed procedures in appointment of corporate
BCs: Being public sector entities, banks while appointing
corporate BCs, need to follow, fair and transparent
practices. Judging the corporate BC capacity to establish
individual BC locations is of a great concern at the time
of appointment. Now, many payment banks are also
offering corporate BC services like FINO, IPPB etc., Delay
in appointment of corporate BC lead to delayed
implementation of financial inclusion.
ii. Inadequate experience of corporate BC: it is a point
of concern in establishing BC network. Forming suitable

40 | 2022 | JUNE | BANKING FINANCE