In its efforts to promote financial inclusion, India’s Central Bank, the Reserve Bank of India (RBI), has promoted the establishment of small local bank branches in rural centres, through which banking correspondents can conduct financial transactions with customers on behalf of a bank. RBI has stated that the smaller branches could be established between the main bank branch and banking correspondent locations in order to support 8-10 banking correspondents working over three to four kilometres each.

Furthering financial inclusion in unbanked rural areas, the Reserve Bank of India has allowed banks to establish ‘ultra small branches’ in rural centres from where Business Correspondents (BCs) can conduct operations on behalf of banks.

“These BC outlets may be in the form of low-cost simple brick and mortar structures,” the RBI said in a notification. Every BC is under the oversight of a base branch. The base branch will have to provide oversight to the BC outlets which will include periodic visits by officers of the base branch to these outlets and to other places of functioning of BCs.

BCs are permitted to carry out transactions on behalf of the bank as agents, and they can refer clients, pursue the clients’ proposal and facilitate the bank to carry out its transactions.

The RBI said these ultra small branches may be set up between the base branch and BC locations to provide support to about 8-10 BC units at a distance of 3-4 km.