The business correspondent (BC) model has been long considered the favourite choice of policymakers in connecting the last mile into financial inclusion, but it faces a huge trust deficit – so much so that even top bankers have been raising the accountability of government’s favourite ‘financial inclusion’ model.

“The BC model is not working the way it should have been working,” chairman and managing director (CMD) of Canara Bank RK Dubey told Governance Now on the sidelines of a seminar on financial inclusion, organised by the Confederation of Indian Industry (CII) in New Delhi on Wednesday.

According to Dubey, facilitators of such model are actually not bankers, so they are not devoted to actual implementation of financial inclusion.

Dubey pressed for more accountability in the BC model than was permitted by the Reserve Bank of India in 2006 to utilise services of intermediaries in providing banking services. In the BC model of operation, the facilitators involved in ‘cash in-cash out’ transactions at rural places, connecting the last mile to the banking system.

“There is need for more accountability of the BC model,” said the CMD of Bangalore-headquartered bank.

According to Dubey, the BC model should be done by the banks themselves. “It should be done either by banks in full capacity or by a contractual employee of the bank who has a long-term commitment towards banking system. The half-baked system of providing banking facility in rural areas by a temporary staff has not served the purpose fully,” he said.

However, Dubey suggested that more low-cost bricks-and-mortar branches in rural areas with dedicated people should actually connect people from unbanked areas into the banking fold.

Dubey said Canara Bank is passionate about implementing financial inclusion scheme. Specifying that the bank is in the expansion mode, he said, “We have opened 500 branches in 2013 and by the end of March 2014, we plan to open 300 more branches.”

“We are looking at expansion and growth in the northeastern states. Besides, we will also open branches in Maoist-affected areas of Jharkhand,” Dubey said.

Stressing on the need to beef up financial inclusion in not only rural but in urban areas as well, Dubey said there is a huge problem of urban financial inclusion in even cities like Mumbai and Delhi.