Previous Year Question
What is/are the facility/facilities that beneficiaries can obtain from the services of a Business Correspondent (Bank Saathi) in branchless areas?
It enables beneficiaries to draw their subsidies and social-security benefits in their villages.
It enables beneficiaries in rural areas to make deposits and withdrawals.
Select the correct answer using the code given below:
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Correct Answer: C
Detailed Solution
A Business Correspondent (BC) is an authorised representative appointed by a bank to provide limited financial services on behalf of the bank in areas where a bank branch or ATM is unavailable. The RBI permitted the BC Model on 25 January 2006 to expand financial inclusion.
Statement 1 is correct. Through DBT, the Government can transfer subsidies, pensions, scholarships, MGNREGA wages and other social-security benefits into a beneficiary’s bank account. The beneficiary can withdraw this money within the village through the micro-ATM of a BC or Bank Saathi.
Statement 2 is correct. Under the RBI’s BC framework, an authorised Business Correspondent can accept small-value deposits and provide cash-withdrawal facilities to account holders.
Other services that may be provided through a BC include:
Assistance in opening basic bank accounts and completing KYC.
Small-value deposits and withdrawals.
Domestic remittances and other payment services.
Disbursal of small loans and collection of repayments.
Preliminary collection and processing of loan applications.
Micro-insurance, pension and other third-party financial products.
Awareness regarding savings, credit and financial literacy.
A BC need not be an employee of the bank but operates on behalf of the bank. The concerned bank remains responsible to customers for the acts and omissions of its BC. Under the RBI’s original directions, a BC cannot directly impose unauthorised charges on customers; the commission or fee is paid by the bank.
Current status (2026)
The Business Correspondent Model remains fully operational and is a major last-mile banking channel for PMJDY and DBT. Present-day BC points commonly use micro-ATMs, the Aadhaar-enabled Payment System (AePS) and biometric authentication.
Through these facilities, a customer may:
Withdraw cash using Aadhaar or a debit card.
Obtain a balance enquiry or mini statement.
Withdraw government benefits and pensions.
Deposit cash into an account.
Access fund-transfer and bill-payment services.
The BC Model is not intended to replace bank branches completely; it extends access to banking services in remote and rural areas.