Business Correspondent Model vis-à-vis Financial Inclusion in India: New Practice of Banking to the Poor

This paper introduces the concept of financial inclusion and highlights its need. It also reviews the banking sector in India and identifies the extent of financial exclusion in the country. Further, the paper provides a brief understanding of the banking correspondent (BC) model in India. The BC model was introduced by the Reserve Bank of India to reach out to people who are normally excluded from the mainstream banking sector. The significant feature of this model is to ensure doorstep delivery of financial products and services to these sections of the population. The paper is based on literature review of relevant publications on this topic and it covers the following sections in detail:

• Introduction to the concept of financial inclusion and exclusion;
• Evolution of the banking sector in India with a focus on initiatives to promote financial inclusion and causes of financial exclusion in the country;
• BC model with a focus on its salient features and guidelines for engaging BCs;
• Scope of using the BC model with respect to financial inclusion;
• Issues and challenges in the BC model;
• Recommendations and guidelines to increase the efficiency of the BC model.