NSFI for relook at BC payouts, use network for cross-selling

The move for the overhaul of the BC channel comes even as the National Institute of Bank Management submitted its report on the channel though it is not yet public

The National Strategy for Financial Inclusion (NSFI: 2025-30) has called for reworking the remuneration structure of business correspondents (BCs), and allowing the channel to be leveraged for hawking financial products like mutual funds, pension, insurance and related services. 

Further, with a view to assessing the extent of financial inclusion (FI) at the regional level, the new NFSI is for developing a broader and disaggregated new series of FI Index, preferably at the level of states and Union Territories. 

The move for the overhaul of the BC channel comes even as the National Institute of Bank Management (set up by the Reserve Bank of India or RBI in 1969) submitted its report on the channel though it is not yet public. 

The stage is set for the overhaul of the two-decade-old BC channel — the world's largest boots-on-the-ground channel with 2.5 million agents in the field. 

 The BC channel has been beset with attrition in recent years, and has been facing a challenge from an unexpected quarter: retail delivery platforms like Swiggy, Zomato, Blinkit and Amazon. According to Dharanidhar Tripathy, chief executive officer (CEO), Business Correspondent Resource Council (BCRC), the main reason for the state of affairs is that “there has been no revision of commission by banks. 

Even rural incentives and allowances for the Northeastern states are not paid by most of the banks. 

It was pointed out that five years back, the average commission paid to BCs was nearly ₹10,000-11,000 per month which has now reduced to ₹7,000-8,000. Nearly 35 per cent of the BC agents now get less than ₹5,000 per month. Around 15-20 per cent take home under ₹3,000. This comes even as banks have started to use BCs to outsource activities like deposit mobilisation, loan recovery, account opening drives, and e-KYC updation. 

To ensure quality and consistency in delivery of financial services at the last mile, fair and reasonable remuneration structure for BC agents is a must. “… a fair remuneration structure of BC agents relating to banking products and services may be worked out under the aegis of Indian Banks Association”, it observed (NSFI: 2025-30). 

On the recalibration of the FI Index (and the new series), Sumita Kale, chief executive officer (CEO) and senior fellow, Indicus Foundation, said the purpose of any data or index is to guide us by pointing out gaps that remain to be filled. “In the FI Index as it stands today, information and data on its constituent parameters are missing. Even the sub-indices of Access, Usage and Quality have not been released regularly.” 

There is a need for transparency on all parameters and data over time and also geographic and gender data. The FI Index improved to 64.2 in 2024 from 49.9 in 2019 with the sub-indices for Access at 79.3 (67.5), Usage at 55.5 (38.7) and Quality at 65.8 (52.6). 

The RBI report on Trend and Progress (2023-24) shows that basic savings bank deposit accounts opened via branches stood at 276.8 million (number) and the amount involved was ₹1.46 trillion. 

And, the same through BCs stood at 429 million and ₹1.53 trillion, respectively. 

Incidentally, the timeline for NSFI: 2025-30 is synchronised with the 2030 Agenda for Sustainable Development adopted by 193 member states at the UN General Assembly Summit in September 2015. This came into effect on January 1, 2016. 

And, the principle of universality: ‘Leave No One Behind’ and omni-dimensional development is the global agenda for 2030.