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Q32 (IAS/2014) Economy › Schemes, Inclusion & Social Sector › Financial sector schemes Official Key

What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas? 1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages. 2. It enables the beneficiaries in the rural areas to make deposits and withdrawals. Select the correct answer using the code given below.

Result
Your answer: —  Âˇ  Correct: C
Explanation

The Business Correspondent initiative enables Government subsidies and social security benefits to be directly credited to the accounts of beneficiaries, enabling them to draw the money from the Business correspondents in their[1] village itself. This directly validates Statement 1.

Banks provide basic services like deposits, withdrawals and remittances using the services of Business Correspondents also known as Bank Saathi.[2] This confirms that Statement 2 is also correct.

The Business Correspondent (Bank Saathi) model was designed to extend banking services to remote and branchless areas, particularly in rural India. By enabling both direct benefit transfers and basic banking transactions at the village level, this model has been instrumental in promoting financial inclusion and ensuring that beneficiaries don't have to travel long distances to access banking services.

Therefore, both statements 1 and 2 are correct, making option C the right answer.

Sources
  1. [2] https://www.pib.gov.in/newsite/erelcontent.aspx?relid=70904
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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless are…
At a glance
Origin: Mostly Current Affairs Fairness: Low / Borderline fairness Books / CA: 0/10 ¡ 10/10
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This is a classic 'Functional Utility' question. UPSC moves beyond 'Who launched it?' to 'How does it actually work for the villager?'. When studying schemes like PMJDY or UPI, focus on the exact operational limits—what can the user do (deposit, withdraw, overdraft) and what can they NOT do.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Do Business Correspondents (Bank Saathi) operating in branchless areas enable beneficiaries to receive and draw government subsidies and social security benefits in their villages?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"This initiative also enables Government subsidies and social security benefits to now be directly credited to the accounts of the beneficiaries and who would be able to draw"
Why this source?
  • Explicitly states the Swabhimaan branchless-banking initiative uses Business Correspondents (Bank Saathi).
  • Says government subsidies and social security benefits can be directly credited to beneficiaries' accounts who would be able to draw the money from Business Correspondents in their village.
Web source
Presence: 5/5
"The initiative enables Government subsidies and social security benefits to be directly credited to the accounts of the beneficiaries, enabling them to draw the money from the Business correspondents in their village itself."
Why this source?
  • Describes branchless banking via Business Correspondents (Bank Saathi) providing basic services like withdrawals.
  • Specifically notes subsidies and social security benefits can be credited to accounts and drawn from Business Correspondents in the village.
Web source
Presence: 4/5
"The BC model has been useful in executing various government initiatives and ensuring the proper distribution of subsidies and benefits."
Why this source?
  • Explains the BC model's role as a link between beneficiaries and government organizations.
  • States BCs enable smooth execution and proper distribution of government subsidies and benefits.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > egin{array}{c|c|c|c|c} \\hline extbf{2015} & extbf{0} & extbf{0} \\[1ex] \ \hline \ \end{array} > p. 251
Strength: 5/5
“What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas? • 1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages. • 2. It enables the beneficiaries in the rural areas to make deposits and withdrawals. Select the correct answer using the code given below: • (b) 2 only • (a) 1 only • (d) Neither 1 nor 2 • (c) Both 1 and 2 31. The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities' sometimes appearing in news are used in relation to • (a) banking operations• (b) communication networking”
Why relevant

The MCQ lists as proposition 1 that BCs 'enable the beneficiaries to draw their subsidies and social security benefits in their villages' and proposition 2 that BCs 'enable beneficiaries to make deposits and withdrawals', then indicates only (2) is correct.

How to extend

A student could infer that standard texts treat BCs primarily as deposit/withdrawal agents rather than as official channels for direct government subsidy disbursement, and so should check how DBT/benefit flows are routed in practice (bank accounts/PoS/Biometric).

Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 39: After Nehru... > JAM Trinity: Jan Dhan-Aadhar-Mobile > p. 779
Strength: 4/5
“The NDA government was instrumental in bringing about an important reform which was given a catchy abbreviated form, JAM, for Jan Dhan Yojana, Aadhaar, and mobile number. The reform was to directly transfer subsidy to the beneficiary. The Pradhan Mantri Jan Dhan Yojana was announced by the prime minister in his Independence Day speech, and it was launched on August 24, 2014. It was one of the largest schemes in the world for financial inclusion, directed towards helping those persons so far without a bank account to open a bank account (without minimum balance requirement), get a debit card, and access to social security schemes like insurance and pension.”
Why relevant

JAM (Jan Dhan–Aadhaar–Mobile) is presented as the reform to directly transfer subsidies to beneficiaries' bank accounts and to enable access to social security schemes via bank accounts.

How to extend

Combine this with knowledge that BCs provide last‑mile banking: one can test whether subsidies routed via JAM require formal bank account transactions (which BCs could facilitate) or separate PoS/agency arrangements.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 9: Subsidies > 9.2.2 Direct Benefit Transfer (DBT) > p. 286
Strength: 4/5
“• 2. When government transfers the cash in the beneficiaries Aadhaar linked bank account and he/ she purchase the product at market price then it removes the possibility of leakages and diversion.• 3. Cash transfers frees up the prices of various goods and services bought and sold in the market which then perform their role of efficiently allocating resources in the economy and boosting long run growth. By implementing DBT in LPG subsidy, government has been able to save more than Rs. 10,000 core a year.”
Why relevant

DBT transfers cash into beneficiaries' Aadhaar‑linked bank accounts to remove leakages, implying subsidies/social benefits are intended to reach bank accounts.

How to extend

A student could check whether beneficiaries in branchless villages receive DBT directly into accounts accessible via BCs (cash‑out) or whether they must use formal bank branches/ATMs/agents.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 9: Subsidies > DBT in Fertilizer: > p. 290
Strength: 4/5
“In January 2018, Government implemented DBT facility for fertilizer subsidies in all the States and Union Territories (UTs). The DBT model in fertilizers is different from the conventional system of DBT being implemented in LPG. Under DBT system in fertilizer subsidies, the farmers/beneficiaries will continue to receive Urea at statutory subsidised prices (Rs. 5.36/kg) and P & K fertilizers at subsidized prices in the market. The fertilizer companies which earlier used to receive subsidy on receipt of fertilizers at the district level, will now get subsidy only after the fertilizers are sold to farmers/beneficiaries by the retailers through Point of Sale (PoS) machines (linked to the Department of Fertilizers' e-Urvarak DBT portal) through biometric authentication by Aadhar Card or Voter ID Card or Kisan Credit Card.”
Why relevant

DBT in fertiliser is implemented via retailer PoS machines linked to an e‑portal and biometric authentication (Aadhaar), not described as using BC cash‑out services.

How to extend

Use this example to probe which DBT schemes rely on PoS/retailer redemption versus bank‑account cash withdrawals (which BCs might provide) to judge whether BCs can directly deliver subsidies in villages.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > E-RUPI: It is different from CBDC, its just a voucher > p. 79
Strength: 3/5
“When a government agency or a corporate entity wants to provide some benefit to some specific beneficiaries then it can approach banks (public and private both) which has been authorized by NPCI to issue digital vouchers. The Govt agency and the corporate entity will provide the list of beneficiaries with their mobile numbers to the banks. The transaction begins with a QR Code, or a long-string SMS pushed into a beneficiary's mobile device by the bank through the bank's voucher management system. The beneficiary will then need to show it to the welfare service provider (specific designated centres) to authenticate the transaction.”
Why relevant

E‑RUPI vouchers are issued by banks to beneficiaries' mobile devices and redeemed at designated welfare service providers, showing some benefit delivery models use specific redemption points rather than BCs.

How to extend

A student could contrast voucher/redemption‑centre models with bank‑account cash disbursement to see if BCs are the intended redemption/cash‑out channel in practice.

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