UPSC Prelims 2014 Question:

What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent Bank Saathi in branchless areas?

1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages. 
2. It enables beneficiaries in rural areas to make deposits and withdrawals.
   
   

Select the correct answer using the code given below:

Explanation:

Business Correspondent is an extended arm of the Bank Branch who is provides Financial and Banking services to customers in unbanked and underbanked areas. 

• The Reserve Bank of India issued RBI guidelines in 2006 for the engagement of Business Correspondents (BCs) by banks for providing banking and financial services.
  
  
• Business Correspondents are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM.
  
  
• BCs enable a bank to expand its outreach and offer a limited range of banking services at low cost, as setting up a brick-and-mortar branch may not be viable in all cases. 
• BCs, thus, are an integral part of a business strategy for achieving greater financial inclusion.
  
  
• BCs are permitted to perform a variety of activities which include identification of borrowers, collection and preliminary processing of loan applications including verification of primary information/data, creating awareness about savings and other products, education and advice on managing money and debt counseling, processing and submission of applications to banks, promoting, nurturing and monitoring of Self Help Groups/ Joint Liability Groups, post-sanction monitoring, follow-up of recovery. It enables the beneficiaries to draw their subsidies and social security benefits in their villages. So, statement 1 is correct.
  
  
• They can also attend to the collection of small value deposits, disbursal of small value credit, recovery of principal/collection of interest, sale of micro insurance/ mutual fund products/ pension products/ other third party products and receipt and delivery of small value remittances/ other payment instruments. So, statement 2 is correct.
  
  

Therefore, option (3) is the correct answer.

Subject: Economics | Money and Banking