Business Correspondents of Banks


  • The information technology ministry is planning to get all the common services centres (CSCs) to act as business correspondents (BCs). The move is aimed at creating last mile access points for financial services across the country.
  • There are approximately 290,000 CSCs in the country—access points with basic computing infrastructure run and operated by a local entrepreneur who lives in the same community.

Digital India Initiative:

  • It is an integral part of the ‘Digital India’ initiative of the government to foster financial inclusion in the country.
  • A business correspondent is an approved bank agent providing basic banking service using a micro ATM.
  • Through Wi-Fi facility, people in 5,000 villages can now enjoy Internet connectivity. WiFi Choupal aims to connect 2.5 lakh Gram Panchayats in the country through highly scalable network infrastructure i.e. optical fiber cable.
  • CSC SPV has entered into an agreement with IRCTC for delivery of services through CSC centres. Now, CSC centres will be able to work as IRCTC agents and would be able to book general tickets.
  • IndusInd Bank is supporting CSC SPV for the digital literacy of 3 lakh candidates through CSR fund. The candidates are also certified under PMGDISHA.

Business Correspondents

  • Business Correspondents are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM.
  • Banks are required to take full responsibility for the acts of omission and commission of the BCs that they engage and have, therefore, to ensure thorough due diligence and additional safeguards for minimizing the agency risk.
  • Basically, BCs enable a bank to expand its outreach and offer limited range of banking services at low cost, as setting up a brick and mortar branch may not be viable in all cases.
  • BCs, thus, are an integral part of a business strategy for achieving greater financial inclusion.

Duties of BCs:

  • BCs are permitted to perform a variety of activities which include identification of borrowers, collection and preliminary processing of loan applications including verification of primary information/data, creating awareness about savings and other products, education and advice on managing money and debt counseling, processing and submission of applications to banks, promoting, nurturing and monitoring of Self Help Groups/ Joint Liability Groups, post-sanction monitoring, follow-up of recovery.
  • They can also attend to collection of small value deposit, disbursal of small value credit, recovery of principal / collection of interest, sale of micro insurance/ mutual fund products/ pension products/ other third party products and receipt and delivery of small value remittances/ other payment instruments.

Engagement of BCs:

  • Individuals like retired bank employees, retired teachers, retired government employees and ex-servicemen, individual owners of kirana / medical /Fair Price shops, individual Public Call Office (PCO) operators, agents of Small Savings schemes of Government of India/Insurance Companies, individuals who own Petrol Pumps, authorized functionaries of well run Self Help Groups (SHGs) which are linked to banks, any other individual including those operating Common Service Centres (CSCs).
  • NGOs/ MFIs set up under Societies/ Trust Acts and Section 25 Companies.
  • Cooperative Societies registered under Mutually Aided Cooperative Societies Acts/ Cooperative Societies Acts of States/Multi State Cooperative Societies Act.
  • Post Offices.
  • Companies registered under the Indian Companies Act, 1956 with large and widespread retail outlets, excluding Non Banking Financial Companies (NBFCs).

Source:Livemint & Wiki

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