BUSINESS CORRESPONDENT MODEL: A STUDY OF DEMAND AND SUPPLY SIDE ISSUES IN JAMMU AND KASHMIR STATE

Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society .it is a very important aspect for socio-economic development in India. Khan commission which was set up by RBI in 2004 to look into financial inclusion in India. Recommended that banks to review their practices and align their objectives in line with financial inclusion. On the recommendation of the committee Banks adopted business correspondent model to achieve financial inclusion goals as opening brick and mortar branches was not economically viable for banks. Business correspondent model since then was widely adopted by banks but much hyped model could not deliver as expected. Literature on the topic suggests many reasons for the problem which include Demand and Supply side issues. This paper reviews Business Correspondent model in Jammu province of J&K state to understand the demand and supply side issues of the model and suggest measures for effective working of the model. For the purpose of the study 4 districts of Jammu province were undertaken namely Jammu, Doda, Udhampur, Kathua. 50 Service providers of SBI and J&K bank were interviewed for the study. Demand side covers 400 respondents from the above said districts. The study reveals that Business correspondents are facing many problems regarding support from parent bank, technology used and commissions paid to the agents. Whereas demand side issues include financial illiteracy, lack of trust, technology problem and lack of necessary services provided.