To ensure that the banking facilities reach the remote villages of India, PM Narendra Modi has brought about a financial inclusion plan in our country. It will help the people to avail of the banking facilities in their place that has no banks within the vicinity. This financial inclusion plan facilitates the economically downtrodden people to get micro-credit, insurance, and money transfer facilities.
The banks use many retail, third party agents called CSPs for kiosk banking, business correspondents, to provide banking facilities to the poor people. Once the agent creates an account for the customers, the account holder can withdraw and deposit money from the main bank sitting at his place. These Business Correspondents or CSPs are middlemen working for several nationalized banks and earn a salary as well as commission.
What do these people do?
The Bank of India kiosk, SBi kiosk, has an important role to play in the life of villagers where the concept of banking was an alien concept till now. They bring together the people in far-flung areas and operate banking transactions, eliminating the need of the customer visiting the main bank. These business correspondents and bank kiosks inform these financially backward people the importance of saving, borrowing in case of need, and the rate of interest the borrower has to pay to the bank.
Are these Kiosks and BC agents of the bank?
These business correspondents and Kiosks have every right to accept cash from the bank and deal with it on behalf of the banks. Since they extend loans to the customers, they should collect EMI, and the principal amount lent to the customers along with the interest. They sell a variety of products like fixed deposits, pension scheme to the poor people. They also make receipt of all the transactions and keep a record of it. These business correspondents, Kiosk, apply for the BOB kiosk banking franchise to carry on the banking functions after the bank’s approval.
Advantages of the BC model and kiosk
The main advantage of having a business correspondent model is that they are closer to the customers and know their financial condition. This will help the bank to improve asset quality as the BCs or Kiosks lend money to those who have the financial capacity to repay the loan. Just like pizza companies and restaurants advertise food at your doorsteps, these are a wonderful initiative by the banks to reach out to the underbanked people and serve them in the customer’s place.
The business correspondent model is one of the wonderful initiatives of the scheduled banks to bring banking facilities at the doorsteps of poor people. These people are a boon to poor people because the nationalized banks can’t come to the village and start a branch there.
These Kiosks or business correspondents such as the bank of India bc help the people to fill in and open a frill account after taking the thumb impressions of the customers, get a loan for their small business and accept the safekeeping of their money in the form of fixed or recurring deposits.