IJSRP, Volume 4, Issue 1, January 2014 Edition [ISSN 2250-3153]
Financial inclusion i.e., access to adequate and timely credit, and other financial services is of utmost importance for socio-economic development of poor and unbanked sections. It enables them to alleviate their poverty levels through self-employment generation and promotes them as a part of rural banking system. Accordingly, Indian Government is being initiated various financial measures in the banking sector, and different microfinance models have been playing an active role in providing microfinance and other financial services to the rural poor. However, despite these efforts, a large number of social groups remained excluded from the basic opportunities and services provided by the formal financial sector. In these circumstances, as a part of financial inclusion drive, Indian government with the help of Reserve Bank of India (RBI), has come up with a new model in the realm of banking sector, called as Business Correspondent (BC) model. This model primarily aims at providing affordable banking facility to the hitherto unbanked population with the help of Information and Communication Technology (ICT) based application and capacity building. Against this backdrop, this paper attempts to introduce the concept of financial inclusion and highlights its need. It briefly reviews the Indian banking sector and reports the level of financial exclusion in India. In the second part, it provides a brief understanding on Business Correspondent model and emphasizes how BC model could significantly helps in promoting financial inclusion of the hitherto excluded population. It concludes by emphasizing some of the operational challenges in its functioning and suggests a way forward.