Client Protection in the Business Correspondent’s Model

With the enthusiasm of banks coupled with support from the Government of India, the Business Correspondent (BC) model has come into prominence in recent years and the focus has shifted to BCs to drive financial inclusion to expand outreach. In this tool, Smart Campaign has made an attempt to capture some of the standardized processes of the BC Model (saving led and credit led) and integrate client protection principles into its key processes.
The BC model was introduced in 2006 with the Reserve Bank of India’s directive that envisaged financial inclusion driven by technology. The RBI circular allowed banks to engage intermediaries in the form of BCs to reach-out to underserved clients. Recently, the BC model has reached significant scale, with the number of BCs engaged by banks having reached 221,341 as of March 2013.

If client protection risks are not addressed in the BC model the market may suffer from:

  • Loss of consumer trust and low uptake of the products and services offered;
  • Inability to make the business case for agents and for the sector as a whole;
  • Negative media attention; and ultimately,
  • Inability to achieve financial inclusion goals.

In view of this, the main objective of this tool is to address some of the client related risks inherent in the BC model by:
“Providing guidelines around client protection in Saving and Credit led Business Correspondent Models”.

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