BC / BF - 2 , Banking Fundamentals to Know for Students.

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Financial Inclusion Programme was launched by the Government of India as more  than 40% of the country's population did not have any access to Banking services.  There was growing concern regarding the link between financial exclusion and  poverty.  Financial inclusion is the delivery of banking services at an affordable cost  ('no frills' accounts,)  to the vast sections of disadvantaged and low income group. What is the BCBF Model?  With the objective of ensuring greater financial inclusion and increasing the outreach  of the banking sector, in Jan 2006 based on the recommendations of Khan  Commission,  the Reserve Bank of India issued a new set of guidelines  allowing banks to employ  two  categories of intermediaries - Business  Correspondents (BCs) and  Business Facilitators (BFs)  - to expand their business. According to the guidelines scheduled commercial banks  including Regional Rural Banks (RRBs) and Local Area Banks (LABs) have been  permitted to use the services of intermediaries in providing financial and banking  services throughout the country and even in remote areas. In this model BCs are permitted to carry out transactions on behalf of the bank as  agents, the BFs can refer clients, pursue the clients' proposal and facilitate the  bank to carry out its transactions, but cannot transact on behalf of the bank.  Recently Reserve Bank of India (RBI) has permitted all Business Correspondents  (BCs) working for one particular bank;  perform business for other banks too. Guidelines for engaging Business Correspondents (BCs)  Banks may formulate a policy for engaging Business Correspondents (BCs) with the  approval  of their Board of Directors. Due diligence may be carried out on the  individuals/entities to be engaged as BCs prior to their engagement. The due  diligence exercise may, inter alia, cover  aspects such as (i) Reputation/market standing (ii) Financial soundness (iii) Management and corporate governance (iv) Cash handling ability (v) Ability to implement technology solutions in rendering financial services. The Role and Responsibilities of the BCs  (a) Enrollment of customers, including a collection of biometric and other details, provide   card  ID Card, Debit Card, Credit Card), PIN. (b) Provide transaction facility. (I) Deposit of money in an account with any bank (ii) Withdrawal of money from an account with any bank (iii) Remittances from an account with a bank to an account with the same or any other  bank. (iv) Balance Enquiry and issue Receipts/ Statement of Accounts. (c) Disbursal of credit facilities to borrowers involving small amounts strictly as per the  instructions of the Bank. (d) Other activities: i. Identification of borrowers and classification of activities as per their requirements. ii. Collection and prima facie scrutiny of loan applications including verification of primary data. iii. Creating awareness about savings and other products offered by the Bank and education  and advice on managing money & debt counseling. iv. Preliminary scrutiny of data and submission of applications to the Bank for its review. v. Promotion, nurturing, monitoring and handholding of Self Help Groups and/or Joint Liability  Groups and/or Credit Groups and others. vi. Facilitating the repayment of dues owed to the bank by its customers. vii. Marketing of third party financial products. Products offered by Business Correspondents:  The following products are to be offered by the CSPs to their clients. a. No Frills Savings Bank accounts b. Recurring Deposit Accounts c. Remittances d. Fixed Deposit e. Overdraft/Retail loans f. KCC/GCC (Kisan Credit Card/ General Credit Card) g. Third-party financial products Who is Eligible for Business Facilitator (BFs) Under the "Business Facilitator" model, banks may use the services of intermediaries  such as: 1.    NGOs/SHGs 2.    Farmers Clubs 3.    Cooperatives 4.    Community-based organizations 5.    IT-enabled rural outlets of corporate entities 6.    Post Offices 7.    Insurance agents 8.    Well functioning Panchayats 9.    Village Knowledge Centres 10.  Agri Clinics 11.  Agri Business Centers 12.  Krishi Vigyan Kendras 13.  KVIC/KVIB units