RBI asks banks to consider using business correspondents to distribute currency

In the backdrop of growing currency demands, the RBI, in a notification, asked banks to explore the possibility of distributing banknotes and coins through business correspondents.
Earlier, RBI, in its Monetary Policy Statement 2013-14, had acknowledged the need to identify alternative distribution possibilities to effectively meet the rising demand for banknotes and coins.

What role the business correspondents are currently playing?

Currently, business correspondents are in the activities which include identification of borrowers, collection and preliminary processing of loan applications, creating awareness about savings and other products and processing and submission of applications to banks.

What did the RBI suggest banks to enhance currency distribution?

RBI has said that services of business correspondents could be used for distributing banknotes and coins. Their services could also be used by banks for follow-up for recovery, disbursal of small value credit and collection of small value deposits. As per the notification by RBI, NGOs, micro-finance institutions, section 25 companies and post offices, among others, could act as business correspondents.

Month: Current Affairs - September, 2013