Banking made easy?

PersonalFN Impact Indicator

In a move to make banking transactions more easy and convenient, the Reserve Bank of India (RBI) permitted banks to adopt the ‘Business Correspondents Model’ from Monday – November 30, 2009.

It means banks will now be able to appoint ‘Business Correspondents’ (BCs) enabling them (banks) to deepen the banking system. RBI has allowed entities like individual kirana/medical/fair price shop owners, PCO operators, agents of government-sponsored small savings schemes, insurance agents, petrol pumps owners and retired teachers to act as BCs of banks.

The principle for appointing such BCs are:

• Experience of these individuals in cash handling (cash inflow and outflow)
• Being residents of the area in which they propose to operate

According to RBI, the charges for services provided by the BCs, will be levied in a transparent manner and BCs will not be allowed to charge customers directly.

The model has evolved after experiencing limitations in the traditional ‘brick and mortar' banking model. As per RBI notification, the new model (Business Correspondents Model) will enable banks to accelerate their goal of financial inclusion.

However, we believe that though the move seems to make banking easier and convenient, there are some serious operational glitches like cash management, security and technology, which need to be considered for safe banking.