My mother lives in a small village in Kerala where a bank has a business correspondent. I do not know whether this entity can undertake banking transactions. I want to know whether the business correspondents are reliable.

R K Pillai, Doha

With a view to promote financial inclusion, the Government wants to provide banking services in every village having a population of more than two thousand. Banks are, therefore, encouraged to establish outlets in such villages from which the business correspondents would operate. Banks have now been advised to open an ultra small branch which would be part of the base branch in a town.

These ultra small branches will provide support to a cluster of business correspondent units which would be located at a distance of three to four kilometers. These ultra small branches would have a core banking solution terminal linked to a passbook printer with proper facilities for cash retention.

The business correspondents would operate from such ultra small branches. This is expected to increase the credibility of banking in the rural area and give people increased confidence to use banking services. The base branch located in the town would supervise the business correspondent outlets by sending officers on periodic visits to these outlets to ensure that they function in conformity with the rules and regulations of the Reserve Bank of India.

The writer is a practicing lawyer, specialising in tax and exchange management laws of India.