New Delhi: The Reserve Bank of India has allowed banks to open 'ultra small branches' in rural areas of the country from where business correspondents (BCs) can conduct operations and thereby boost confidence of customers to use their financial services.
"It has been decided that BCs can operate from such ultra small branches as their association with the branch will increase their legitimacy and credibility in the area and give people increased confidence to use their services," RBI said in a notification.
Business correspondents are representatives authorized by banks to act on their behalf in remote regions of the country. The business correspondent model was developed by the RBI in 2006 to boost the government's financial inclusion program that aims to take banking services to the far-flung regions of the nation.
These ultra small branches may be in the form of low-cost simple brick and mortar structures, the notification said.
Further, the branches may be established between the base branch and BC locations to provide support to about 8-10 BC units at a distance of 3-4 kilometers, it added.
However, banks must ensure that such arrangements must not lead to business correspondents servicing customers at these branches only, the RBI noted.
Further, the base branch will have to provide oversight to the ultra small branches which will include periodic visits by officers of the base branch to these outlets, it said.