MICROCAPITAL BRIEF: Reserve Bank of India to Issue Guidelines For Interoperability Among Business Correspondents “Shortly”

The Reserve Bank of India (RBI) is working to enable interoperability among business correspondents (BCs) to promote financial inclusion in rural areas [1]. BCs are third-party representatives, such as retailers, that provide services to banking customers outside of bank branches [2]. Currently, a BC may work wth only one bank in a particular area. With interoperability, the BC of one bank also will be able to service customers of other banks, which is expected to help customers such as migrant laborers access banking services from more. RBI reportedly has settled on the broad principles of the changes, with final guidelines expected to be issued soon. As of the end of March 2011, BCs serviced 76,801 villages and 3,653 urban locations in India [1].

By Natalie Baer, Research Associate

About the Reserve Bank of India (RBI): Established in 1935, the Reserve Bank of India (RBI) undertakes consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies (NFBCs). The current focus of RBI is to supervise financial institutions, consolidate accounting standards, resolve legal issues in cases of banking fraud, monitor non-performing assets and supervise the rating model for the banking sector. In 1979, the National Bank for Agriculture and Rural Development (NABARD) was formed at the behest of RBI to provide regulatory oversight to regional rural banks (RRBs) and to promote the development of agricultural lenders: tasks that had been the responsibility of RBI. While all microfinance institutions (MFIs) and non-banking financial companies still operate under RBI regulations, the responsibility for inspecting nonprofit MFIs, agricultural lenders, RRBs, state cooperative banks, district central cooperative banks and state cooperative agricultural and rural development banks was transferred to NABARD. RBI maintains these responsibilities for for-profit MFIs. Although RBI was originally the parent organization of NABARD and until October 2010 held a 72.5 percent stake in the outfit, RBI owns a one-percent stake in NABARD as of 2011.

Sources and Additional Resources:

[1] Business correspondent model to be changed to aid inclusion
http://www.livemint.com/2012/02/01235004/Business-correspondent-model-t.html?h=B

[2] Business correspondents take bank to doorsteps of poor
http://www.dnaindia.com/money/report_business-correspondents-take-bank-to-doorsteps-of-poor_1584102

MicroCapital story, January 29, 2012, “MICROFINANCE PUBLICATION ROUND-UP: Willingness to Pay for Business Correspondents in India, Health Microinsurance Third Party Payment Mechanisms, Accenture Development Partners Report on Microinsurance” https://www.microcapital.org/microfinance-publication-round-up-willingness-to-pay-for-business-correspondents-in-india-health-microinsurance-third-party-payment-mechanisms-accenture-development-partners-report-on-microinsuranc/

MicroCapital story, July 18, 2011, “MICROCAPITAL BRIEF: Costs Decrease, Account Openings Increase via India’s Branchless Banking Model, Microfinance Institutions Remain Excluded” https://www.microcapital.org/microcapital-brief-costs-decrease-account-openings-increase-via-india%E2%80%99s-branchless-banking-model-microfinance-institutions-remain-excluded/

MicroCapital Universe Profile: Reserve Bank of India (RBI),
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Reserve+Bank+of+India+%28RBI%29

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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