Financial Inclusion through Business Correspondents (BCS) Model in India: A Case Study of the Indian Overseas Bank

In India, majority of the population resides in rural areas. So the economic development of rural India is a key step towards economic development of the whole country. People residing in rural areas, where banking facilities have not yet reached, are unaware of the benefits of financial services. Finance is an integral part of every body's life. So managing the hard earned money to see that it grows to yield more money is very important. But people, who are not aware of this, fall a prey in the hands of greedy money lenders.

These money lenders take undue advantage of the ignorant people and they fall in debt-trap that lasts for not only their life but for generations to come. The National Bank for Agriculture And Rural Development survey report says that 50 Per Cent of the people have not got banking facilities in rural areas especially in Tamilnadu Karnataka, Kerala Madhya Pradesh, Maharashtra, Rajasthan and West Bengal This situation warrants the public and private sector banks to take comprehensive actions to improve the banking facilities in rural areas. A few banks have started recognizing the potential of Business Correspondent Model (BCM) to enlarge the business in the unbanked villages and among the unbanked consumers.

One such effort, on improving banking facilities in rural areas, was taken by the Indian Overseas Bank (IOB), Rasingapuram Branch of Theni District in Tamilnadu. This effort was “to encourage Business Correspondents(BCs) to play an active role in financial inclusion, by supporting them with technology applications and capacity building (Rangarajan Committee, 2008).It was also “to provide banking services in village population of 2000’’ (Second Quarter Review of Monetary Policy, 2011–2012) Further the IOB was to aim at achieving the goals set by National Financial Inclusion in relation to banking facilities to the un-banked rural areas within a time frame (National Mission on Financial Inclusion,2012) That effort is presented as the case study, which has been reported in this paper. The two Correspondents of Indian Overseas Bank have been taken up as samples of this case study.