This post has a reference to following posts
WHY IS THE NEED TO PROMOTE FINANCIAL INCLUSION?
http://santoshbehar.blogspot.in/2012/03/need-to-promote-financial-inclusion.html
BUSINESS CORRESPONDENT MODEL - REPORTS
http://santoshbehar.blogspot.com/2011/11/business-correspondent-model-reports.html
Some of the possible considerations for success of Business Correspondent Model are listed as under:-
- A
set of innovative financial instruments targeted at low-amount /
high-volume savings of rural population may be helpful for success of BC
Model. It may create an opportunity for rural masses to look for
substantial savings in long term perspective. If supported with a healthy
business environment, where the small savings can be diverted to become a
part of capital for low risk investments, rural savings can contribute
towards increasing economic productivity.
- To
build on savings in the no-frill account, promotion of business of
Microcredit though BC Model can be explored. Commercial banks are
reluctant to lend to the poor largely because of the lack of collateral
and high transaction costs. Success of microcredit is based on innovative
ways of reducing transaction costs and developing a systematic support for
trustworthy credit seekers to avail small loans without collaterals. To
some extent, this helps in reducing asymmetry in capacity to get loan
(through formal banking) between those who have collateral and those who
do not have. The Grameen Bank of Bangladesh, the most prominent of the
successes, now reaches over 2 million people, with cumulative lending of
about $2.1 billion. Similar successful examples are known in Latin America
(e.g., Banco Solidario in Bolivia), less so in Africa (the Kenya Rural
Enterprise Programme is a good example).
- To
encourage entrepreneurship, a comprehensive approach to facilitate availability
of resource, develop entrepreneurial business environment and put efforts
to engage people with aspirations for innovative, sustainable and
productive business endeavours could be worked out. There is now
considerable consensus that lending to the poor can succeed provided it is
accompanied by other services, especially training, information and access
to land.
- Coordinated
efforts may need to be put up by the institutions in the private, public,
and social sectors in synchronization with banking and telecom sectors for
success of BC Model. Exploration of services (which can be provisioned
through BC) used by the low income population could be helpful. Further, a
strong logistical support and secure mechanism for cash handling to the
remotest areas (to facilitate BC operators for transferring cash at
economical costs) may need to be developed.
- Simplicity in procedure to avail the banking services could make a big difference. A study by the International Fund for Agricultural Development (IFAD) has confirmed that complicated loan procedures and paperwork, combined with a lack of accounting experience, limit poor people's access to formal sources of credit.
- The window of opportunity for BCs to make a profitable business may be open for short period of time. With increasing telecom penetration and ease of adaption of mobile phones at all levels in India, a radical shift in favour of mobile based branchless banking model may soon start challenging BC Model. This is evident from a survey done in the Asia pacific countries, which shows that 42 percent of the mobile customers use the basic banking services, such as checking the account balance, on their mobile devices.
References:
[1] http://www.grameen-info.org/index.php?option=com_content&task=view&id=42&Itemid=92&limit=1&limitstart=3
[2] http://www.siliconindia.com/guestcontributor/guestarticle/193/Branchless_Banking__Financial_Inclusion.html
[3] http://www.nextbillion.net/blog/building-markets-for-financial-inclusion-
[4] http://www.portfoliosofthepoor.com/book.asp
(Sites as accessed on 18 NOV 2011)
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