(a) whether Reserve Bank of India has issued a directive to the Banking Institutions to hand over the basic services like deposits and loans to private organisations;
(b) if so, the details thereof; and
(c) the impact of this decision on the depositors?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PAWAN KUMAR BANSAL)
(a),(b)&(c) : Banks have been permitted to use the services of intermediaries in providing
financial and banking services through the use of Business Facilitator and Business
Correspondent models. The guidelines have been issued to banks in January 2006.
Under the `Business Facilitator` model, banks may use intermediaries such as NGOs/Farmers Clubs,
cooperatives, community based organisations, Post Offices, Insurance Agents, well functioning
Panchayats, Village Knowledge Centres, Agri Clinics/ Agri Business Centres, etc. for providing
facilitation services. Such services may include-identification of borrowers; collection and
preliminary processing of loan applications including verification of primary information/data;
creating awareness about savings and other products and education and advice on managing money
and debt, conselling, etc.
Under the `Business Correspondent Model, NGOs/MFIs set up under Societies/Trust Act, Societies
registered under Mutually Aided Cooperative Societies Acts or the Cooperative Societies Acts of
States, Section 25 companies and Post Office may act as Business Correspondents. The scope of
activities under taken by Business Correspondents 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.
The guidelines have been issued with the objective of ensuring greater financial inclusion and
increasing the outreach of the banking sector.