In a bid to give back-end support to business correspondents operating in rural areas and also exercise administrative control on them, State Bank of India has decided to set up 600 financial inclusion centres across the country.

The move to set up FICs is aimed at powering the bank's drive to reach basic and affordable banking services to 12,421 out of the 72,315 unbanked villages (identified according to 2001 census) having a population of over 2,000 by March-end 2012.

According to the Government and the Reserve Bank of India's directive, banks, especially from the public sector, between them have to ensure that all identified villages have appropriate banking services by March-end 2012. These services have to be provided using the business correspondent (BC) and other models with appropriate technology back-up.

As the FICs have been envisaged by SBI, each centre will provide the BCs back-end support services for opening ‘no frills account', processing applications for micro-credit (up to Rs 25,000) sourced by them, and cash management. Further, the centre will also keep tabs on the progress made by the BC in furthering the bank's financial inclusion plan.

Each FIC will support and control 25 BCs. India's biggest lender has marshalled the services of 14,000 odd BCs, including those working with third-party technology service providers, for fulfilling its financial inclusion mandate.

By March-end 2011, SBI will have 300 FICs. Last month, the bank set up 22 FICs in Andhra Pradesh and four in the National Capital Region. Overall, it will establish 600 FICs by March-end 2012.

Basic banking services

“Under the financial inclusion plan, our bank is currently providing basic banking services in 1,300 villages. This number will jump to 5,300 by March-end 2011. We will complete the target of providing banking outreach in 12,421 villages by March-end 2012,” said Mr M.I. Dholakia, Deputy General Manager, SBI.

A BC undertakes activities such as identification of borrowers; collection and preliminary processing of loan applications including verification of primary information/ data; creating awareness about savings and other products and advice on managing money and debt counselling; submit loan applications to banks; disbursal of small value credit, recovery of principal/ collection of interest, collection of small value deposits, sale of micro insurance/ mutual fund products/ pension products/ other third party products and receipt and delivery of small value remittances/ other payment instruments.

Among others, the entities that can function as BCs include NGOs/ MFIs set up under Societies/ Trust Acts, Post Offices, retired bank employees, ex-servicemen, retired teachers, retired government employees, individual kirana/ medical/ fair price shop owners, Public Call Office operators, agents of small savings schemes of Government of India/ Insurance Companies, individuals who own petrol pumps, and authorised functionaries of well run Self Help Groups (SHGs) linked to banks.