BCRC seeks dedicated equity fund and wider access to RBI support schemes

The self-regulatory body for business correspondents has sought a dedicated equity fund, access to financial inclusion support and a pricing review to strengthen last-mile banking

In a recent meeting between the Business Correspondent Resource Council and the Reserve Bank of India, the former    sought the setting up of a dedicated business correspondent (BC) equity fund — modelled on the Microfinance Equity Fund - and structured as a consortium between the government of India and development finance institutions.

 

BCRC, the self-regulatory body for BCs, also sought access to the Financial Inclusion Fund and the Payments Infrastructure Development Fund to directly subsidise essential digital infrastructure at the agent level — tabs, passbook printers, micro-ATMs, biometric devices, UV lamps, fake-currency detection and cash-counting machines — where per-agent equipment costs of ₹1–1.5 lakh annually strain sustainability.

 

“With the right policy support, a stronger and economically viable BC ecosystem has the potential to generate lakhs of additional livelihood opportunities, particularly for rural youth and women, while expanding access to banking, government services, insurance, pensions, and other digital financial services’, said D Tripathy, chief executive officer of the BCRC.

 

The demand for setting up funding institutions for BCs is similar to the recommendation made in the C Rangarajan Committee report on Financial Inclusion published in January 2008, where it suggested funds be provided to specialised institutions that provide capacity-building inputs to BCs.

 

The report also pointed that a risk-sharing framework needs to be put in place that apportions liability by proximate cause, replacing the current position where BCs bear full liability even for fraud arising from the bank's processes or from technology failure.

 

The other issues discussed at the BCRC-RBI meeting were the possibility of an RBI-convened meeting with BC industry representatives and the Indian Banks’ Association, and to set up an independent pricing committee to examine the commission architecture for BCs, who provide last mile banking services in remote and unserved areas that branch services cannot access.

 

The latest round of deliberations between BCRC and RBI should be read along with the National Strategy for Financial Inclusion (NSFI): 2025-30.

 

The NSFI observed last-mile financial services needs to be improved. Earlier, The National Institute of Bank Management - set up by the RBI – had been tasked to suggest measures for improving the BC network.

 

A critical aspect which has reared its head in recent times is climate change.

 

“Climate-related issues are affecting those at the bottom of the pyramid in a big way. And it presents an opportunity to sell weather-indexed insurance,” said a BCRC official who declined to be named.

 

Policies designed to trigger payouts (livelihood support) based on specific weather conditions, like low rainfall, extreme heat conditions and similar events. It is argued such an approach will enable the vulnerable section of society to better withstand climate shocks, providing a critical safety net in times of environmental uncertainty.

 

Meanwhile, the Insurance Regulatory and Development Authority of India (Irdai) has been pushing the Bima Trinity - Bima Vistaar, Bima Vaahaks, and Bima Sugam, and it is felt the BC network over five-lakh strong with a footprint across the country, can play a role even as offering insurance bolsters the earning capacity of field agents.

 

According to the central bank's Report on Trend and Progress of Banking in India (FY25), the number of basic savings bank deposit accounts increased by 2.6 per cent to 72.4 crore at end-March 2025, while the aggregate balance in these accounts increased by 9.5 per cent to 3.3 lakh crore.

 

That said, the quality of BCs and their 'stickiness' – the ability to stay put at the field level - is a matter of concern.

 

A white paper by the Indicus Centre for Financial Inclusion in March 2021 observed that more than a quarter of the agents were incurring losses. One of the reasons is the inadequate compensation to banks for government transfers leads to lower compensation to BCs. And this, in turn, leads to poor training, service quality and restricted accessibility to the public.

 

In addition, there has been a trend of rising share in non-dedicated agents. While 45 per cent of the agents surveyed in 2017 were dedicated agents, 36 per cent of these reported making losses compared to just 21 per cent non-dedicated agents. Further, 34 per cent of these dedicated agents expressed their intent to start other businesses as well to supplement incomes. The high share of non-dedicated agents prevents them and their customers from benefitting from specialisation.

• BCRC has also sought access to the Financial Inclusion Fund and the Payments Infrastructure Development Fund to directly subsidise essential digital infrastructure at the agent level
• The need for a risk-sharing framework that apportions liability by proximate cause was discussed. This is to replace the current position where BCs bear full liability even for fraud arising from bank-side process or technology failure
• The National Strategy for Financial Inclusion (NSFI): 2025-30 observed last-mile financial services needs to be improved
• Earlier, The National Institute of Bank Management -- set up by the RBI – had been tasked to suggest measures for improving the BC network
• The RBI’s Report on Trend and Progress of Banking in India (FY25), the number of basic savings bank deposit accounts (BSBDAs) increased by 2.6 per cent to 72.4 crore at end-March 2025, while the aggregate balance in these accounts increased by 9.5 per cent to 3.3 lakh crore.