To improve confidence of people in remote areas in banking operations, the Reserve Bank of India (RBI) has asked business correspondents (BCs) to operate from ultra small branches.
The decision to extend credible banking services to rural areas form part of the RBI’s decision to provide banking services in every village with population above 2,000. Banks have covered 74,199 (99.7%) out of 74,414 such villages under the proposed plan of financial inclusion.
"...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 on 17th May.
To provide support of 8-10 units in a distance of 3km to 4km, the ultra small branches should be set up between the base branch and BC locations.
The banking regulator said that these branches should have minimum infrastructure such as core banking solution terminal linked to a pass book printer and a safe for cash retention to operate larger customer transactions. These arrangements would lead to efficiency in cash management, documentation, redressal of customer grievances and close supervision of BC operations.