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What shall government do to make the BC model viable?

Started by : Swati Raut, Product Manager, Aviva   01 11 2010 05:43:49 +0000
Industry : BankingFunctional Area : India(Markets)
Keywords : banks viable bc model
Activity:  10 views;  last activity : 07 06 2010 20:18:09 +0000

According to a report by Skotch Development Foundation, 25 million no-frill accounts were opened between April 2007 and May 2009, only 11% of them are operational. The finding raises the critical question of the cost of intermediation and who should bear the cost since viability gap is there. RBI said the facts presented in the Skoch study could not be contested but the Banking

Correspondents or BC model is the most significant reform which has taken place in the banking system. No-frills account will not give any help to a poor man if he is not economically enabled to do banking transactions.However, the cost is still found unsustainable in the short to medium term for the BCs.

So I want to ask the users in this platform according to them, what shall government do to make the BC model viable....
 
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1 Banks can provide long term loans
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Banks can provide long term loans

idea posted by Swati Raut Product Manager, Aviva

To make banks pro-actively engage the BCs in loan services, including recovery, insurance, etc. The banks could also provide long-term loans at priority sector interest rates without collateral (on the basis of projected 5-year balance sheets) to meet the working capital needs of BCs
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