Business Correspondents

Business Correspondents (BCs), critical to financial inclusion in rural India, have approached the Ministry of Finance (MoF) seeking resolution over stagnant remuneration structures, especially as banks intensify deposit mobilization efforts amid falling credit-deposit (CD) ratios.

Business Correspondent (BC)

A Business Correspondent (BC) is a representative of the bank, who offers banking services to people in the unorganized sectors. BCs are an important constituent of financial inclusion, which means making banking accessible to everyone.

• What does a BC do?
  • Open a person’s bank account, Process a loan application, Deposit money and withdraw money, and many other financial services.
• How does a BC function?
  • BCs make use of the mobile phone in the facilitation of the services provided by a bank
  • A customer may make a transaction after he/she makes an electronic signature and/or thumb impression.
  • For each transaction the BC completes, it is compensated.
• Why do BCs matter?
  • BCs can facilitate a bank’s penetration of previously unreachable locations.
  • BCs enable low-cost delivery of banking services.

Issues in Business Correspondent (BC)

• Static Commission Rates:
  • The BC profitability gets impacted, mainly in rural and semi-urban areas.
• High Attrition:
  • BCs have a very high attrition rate due to low commissions and operational demands.
• Limited Value-Added Services:
  • BCs operate mostly on cash-in, cash-out operations and get limited training to offer more financial products.

Capacity-Building and Governance

• Need better training of the field staff and development of a larger pool of skilled trainers.
• Increase in Digital Banking Units (DBUs)