The Microfinance Review

A. K. Srivastava ¹

Affiliations
1 BIRD, Lucknow, IN

Abstract

This paper provides insights into the role played by Business Correspondents and Business Facilitators in extending banking facilities to villages located at a distance from bank branches. The identification of a member of a Self-Help Group (SHG) from the village to work as the Business Correspondent Agent (BCA) of the bank helps in securing confidence of the most disadvantaged sections of the society. The paper provides details of activities undertaken by the BCA for ensuring extension of various banking facilities up to the doorstep of villagers. The support provided by the technology service provider (TSP) for confidence-building of the BCA and ensuring uninterrupted services have also been highlighted. The paper also brings out the bank’s commitment to this model by entrusting various tasks to the BCA. This helps to improve their viability and also to comply with various systems and procedures for availing their continuous service. Overall, SHG members as BCAs have proven to be a successful model for extension of banking facilities in the study area. However, continuous efforts are required from the TSP and the bank to ensure viability and success of this model.

Keywords

Business Correspondent, Banking, Business Facilitator, Self-Help Group.

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A. K. Srivastava ¹

Affiliations
1 NABARD, IN

Abstract

The country has adopted a bank-led model for financial inclusion. A lot of initiatives undertaken by Government of India, Reserve Bank of India and banks could not yield desired result as they were addressing supply-side issues. The financial literacy was considered essential to generate demand for financial products and services. The task of imparting financial literacy to the masses was institutionalised and banks were advised to set up Financial Literacy Centres (FLCs) for this purpose. These FLCs have helped to improve financial inclusion of people, particularly in rural areas and among disadvantaged sections of society. However, these FLCs are facing several constraints and require support to improve their effectiveness. This article examines various issues affecting these FLCs and suggests measures to improve their functioning.

Keywords

Financial Literacy Centres, FL Counsellors, Lead Bank, Financial Inclusion.

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A. K. Srivastava ¹

Affiliations
1 Former General Manager, NABARD, IN

Abstract

The pace of economic development in our country is largely dependent on inclusiveness of rural areas in this process. Rural financial institutions (RFIs) and microfinance institutions (MFIs) have become an integral part of the financial landscape, and can play an important role in this regard. Technology occupies a crucial position in the process of development in modern times. The RFIs/MFIs are also required to leverage the technology to remain relevant, competitive and financially viable. This has necessitated the use of available technology to increase their outreach and expand their business. However, the socio-economic features of their clients are quite different from those in urban areas. This requires these institutions to employ suitable strategies so as to ensure adoption of technology by their clients. This paper discusses various determinants like impact of government policies and infrastructure developments, which could potentially influence these institutions and aid the diffusion of technology. The strategies adopted by these institutions for expansion of technology and the use of payment system have also been discussed in the paper. It also provides some suggestions for adoption of technology by these institutions in the days ahead.

Keywords

RFI, MFI, Technology, Aadhaar, Strategy, Awareness, Payment System

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