Taking Banks to India's Poor

.......At the time, the Reserve Bank of India and the government were trying to expand the formal financial sector, beginning with a bank account for every Indian. But banks were reluctant to open branches in remote areas. That’s where FINO stepped in as a banking correspondent (BC), an agent which takes over banks’ front end for a fee, and did the due diligence for banks in lending money and opening accounts for customers. Between 2007 and March 2009, it signed up five million customers for banks. However, over 80 percent of these accounts were inactive and banks took just cursory measures to ensure that they were in line with the RBI. Then the Central bank cracked the whip. In 2009, then RBI Deputy Governor Usha Thorat decreed that banks would have to reach 70 percent of India’s villages by 2013. Banks had no choice but look for agents who would act as their extensions.  

Read - Forbes India Magazine