NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, June 3, 2005

Banks may soon be allowed to use business correspondents for disbursal of credit and collection of interest, in the rural sector. This is one of the recommendations of the Reserve Bank of India’s Internal Group on Rural Credit and Micro Finance.

The group has suggested the business facilitator model for providing non-financial services and the business correspondent model for providing financial support services to rural and farm sectors.

Banks can use the business facilitator model for services such as borrower identification, collection, processing and submission of applications, preliminary appraisal, marketing of the financial products including savings, post sanction monitoring, promotion and nurturing self-help groups and follow-up of recovery.

NGOs, farmers’ clubs, functional co-operatives, IT-enabled rural outlets of corporates, postal agents, insurance agents, well functioning panchayats, rural multipurpose kiosks, agri clinics and business centers financed by banks, may function as business facilitators.
Story found here.