INDIA'S LEADING ECONOMIC RESEARCH FIRM
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|Agent Network Management - Corporate retail networks as business correspondents of banks : Policy Brief on Financial Inclusion in India|
|Friday, 09 September 2011 13:01|
While branchless banking through business correspondents (BCs) has been in force since 2006, for-profit companies have been allowed to operate as BCs for banks recently in September 2010.With the RBI allowing for-profit corporates to engage as business correspondents for banks, banks are gearing up to partner with the corporate sector in order to leverage their wide retail network in rural areas. While this partnership offers huge opportunity to achieve the unfulfilled goal of financial inclusion, the models of engagement are still evolving. On one hand, corporates have to deal with financial viability and inherent technology risks, on the other banks have a much higher stake at maintaining financial stability, liquidity management and reputation risk. The BC model has been proven to be commercially viable by the fifth year and companies dealing in FMCG, oil, agri inputs, pharma and telecom have greatest potential to act as BC to banks. Going forward it is important to address the needs of the widely heterogeneous population in the country and put in place models and systems that will best exploit the latent synergy in banks and corporates, moving India towards universal financial inclusion in its truest sense.
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