- Business Correspondent
- Understanding Commission Model
- Business Correspondent Roles and Responsibilities
- Attracting new customers
- Delivering products & services
With the target of guaranteeing bigger monetary inclusion and increasing the reach of the banking sector, in Jan 2006 supported the recommendations of the Khan Commission for the aim of increasing their business. Bank of India issued a brand new set of pointers permitting banks to use 2 classes of intermediaries that square measure Business Correspondents (BCs) and Business Facilitators (BFs).
Business Correspondents are allowable to hold out transactions on behalf of the bank as agents. The reserve bank of India (RBI) has pictured the monetary inclusion arrangement that aims to produce easy accessibility to reasonable financial products and services for the economically weaker sections and lower financial gain teams within the country. It initiated the Business Correspondent Model in 2006. Beneath this framework, Business Correspondents (BCs) square measure authorized as third party agents by banks and deliver banking and monetary services on behalf of the banks. For his or her services, Business Correspondents additionally receive a commission from these banks. Business Correspondents have a polar role to play as they bring about very important banking facilities to the financially excluded members of the society in far-flung areas wherever banks don’t have a presence. The Business correspondent model is really a partnership model whereby every partner includes a specific role to play.
The company has collaborated with leading public sector banks particularly the banking company of India (SBI) and Bank of Baroda for setting up cubicle Banking shops across cities. Business correspondents square measure engaged by banks as retail agents to supply banking services to their customers. Hence, instrumental in growing the reach of banks through cubicle Banking facilities wherever services & products are on the market at a reasonable value.
Understanding Commission Model
Business Correspondents perform on the idea of a commission model. They receive a commission from the bank for the services rendered by them like every new account opened for purchasers, cash transfer dealing, or new loans disbursed. Consistent with the run, the banks shall pay affordable commissions to their BCs. And, the speed and quantum of the commission could also be reviewed sporadically. Whereas the BCs square measure is strictly prohibited from charging any fee from the shoppers for his or her service, the banks square measure entitled to levy affordable service charges from their customers in an exceedingly clear manner.
As per RBI, the commission structure or incentive mechanism is intended in an exceedingly method that a mere rise within the range of shoppers served or the dealing volume doesn’t drive the commission. The remuneration shall mix fastened and variable elements dependent, among different things, on sure indication or client satisfaction index. Some portion of the variable remuneration might be postponed or taken back in case of a deficiency of service.
Business Correspondent Roles and Responsibilities
Business Correspondents make sure the delivery of walk banking services to several customers on behalf of the banks. The activities that square measure dead by them shall be among the conventional course of the banking business of the involved bank, however, administered through and by the entities at places apart from the Bank’s premises.
A Business Correspondent might function a before Christ for quite one bank, at the purpose of client interface, the retail outlet or sub-agent of before Christ ought to represent and deliver banking services of only 1 explicit bank. The terms and conditions governing the contract between the bank and also the before Christ should be rigorously outlined in written agreements and subjected to thorough legal vetting.
Attracting new customers:
- By characteristic prospective customers for the bank, the business correspondents have interaction in generating awareness among customers on the market-saving choices and different monetary products of the bank.
- They square measure to blame for educating and advising their customers on managing cash, debt content also recommending tiny loans to focus on customers.
- The scope of labor for before Christ additionally includes promoting, nurturing and observation of self-facilitate Groups/ Joint Liability Groups/Credit Groups/others.
Delivering products & services:
- Business correspondents execute the task of collection and handling the preliminary process of assorted forms for deposits that involves verification of primary information/ information.
- They square measure in charge of enrolling the shoppers for the varied monetary products. This additionally involves filling varied applications or account gap forms as well as nomination clauses and submission to the bank.
- When gap a checking account for his or her customers, Business correspondents additionally complete the whole ‘know your client’ (KYC) method as a part of the gap formalities involving an assortment of important customer info from time to time.
- The method of the gap of no ruffle deposit accounts and different products as allowable from time to time by investing technology is managed by the Business correspondents.
- They square measure authorized to produce mini account statements and different account connected info, for a minimum amount of three months to their customers.
- In addition, they additionally deliver the other service on behalf of the Bank, punctually licensed by the acceptable authority.
- Besides, cross-selling small insurance, Business correspondents additionally promote products through cubicle banking facilities as well as fund products, pension products, and different such third-party products.