Why do banks need business correspondents (BCs)?
RBI issued guidelines in January, 2006 asking banks to engage business correspondents (BCs). BCs are retail agents who provide banking services at locations other than a bank branch/ATM. Their functioning is to enable a bank to expand its outreach and offer a limited range of banking services at low costs, since setting up a brick and mortar branch is not viable in all cases. Who can act as BCs for banks? Banks can engage companies registered under the Indian Companies Act, 1956 with large and widespread retail outlets, excluding non-banking financial companies. RBI allows companies with an extensive retail or dealer network across the country to be appointed as BCs. Retired bank employees/teachers/government employees and ex-servicemen, individual owners of kirana, medical or fair price shops, individual public call office operators, agents of small savings schemes of the government and insurance companies can also act as bank…
