Agro Money

FINANCIAL INCLUSION-REACHING THE UNREACHED

Indian economy in general and banking services in particular have made rapid strides in the recent past. However, a sizeable section of the population, particularly the vulnerable groups, such as weaker sections and low income groups, continue to remain excluded from even the most basic opportunities and services provided by the financial sector. Financial inclusion is aimed at providing banking / financial services to all people in a fair, transparent and equitable manner at affordable cost. Households with low income often lack access to bank account and have to spend time and money for multiple visits to avail the banking services, be it opening a savings bank account or availing a loan. These families find it more difficult to save and to plan financially for the future. Thus, the unbanked public is largely cut off from the Banking products/services. It is the endeavor of the Bank to provide the basic banking facility of SB a/cs to all the unbanked.

Financial Inclusion Package: To start with, the Bank provided 'No frills' SB accounts. As a next step, small overdraft facilities were allowed in the SB accounts in order to cater to the account holder's general purpose or consumption needs, which eventually would provide credit history for the future. Those who are engaged in income generation activities were provided with General Credit Card facility (GCC) with a flexibility of rollover facility.

Business Facilitators / Business Correspondents (BF/BC)
With the objective of ensuring greater financial inclusion and increasing the outreach of the banking sector, the RBI has permitted banks to use the services of NGOs / SHGs, MFIs and other civil society organisations as intermediaries in providing financial and banking services through the use of BF and BC Models.

Business Facilitator Model
Under the BF Model, banks may use intermediaries such as NGOs, farmers' clubs, cooperatives, community based organisations, IT-enabled rural outlets of corporate entities, post offices, insurance agents, well functioning Panchayats, village knowledge centres, agri-clinics / agri-business centres, Krishi Vigyan Kendras and KVIC / KVIB units for providing facilitation services. It has been clarified that such services may include :

• Identification of borrowers and fitment of activities,
• Collection and preliminary processing of loan applications,
• Creation of awareness about savings and other products, education and advise on managing money and debt counseling,
• Processing and submission of application to banks,
• Promotion and nurturing of SHGs / JLGs,
• Post sanction monitoring,
• Monitoring and hand holding of SHGs / JLGs / credit groups / others, and
• Follow-up for recovery.

Business Correspondent Model
Under the BC Model, NGOs / MFIs set up under the Societies / Trust Act,
Societies registered under Mutually Aided Cooperative Societies Acts or the
Cooperative Societies Acts of States, Section 25 Companies, Registered NBFCs not accepting public deposits and post offices may act as BCs. Banks have been advised to conduct due diligence on such entities and ensure that they are well established, enjoy good reputation and have the confidence of local people.

In addition to the activities listed under the BF Model, the scope and activities to be undertaken by BCs will include

• Disbursal of small value credit,
• Recovery of principal / collection of interest,
• Collection of small value deposits,
• Sale of micro-insurance / mutual fund products / pension products / other third party products, and
• Receipt and delivery of small value remittances / other payment instruments.