BC network faces heat from qcom platforms as agents take up gig work

The business correspondent banking channel is facing attrition as agents are leaving over declining commissions, despite bringing in more new deposits than branches

The country’s business correspondent (BC) network is facing a challenge from an unexpected quarter: retail delivery platforms like Swiggy, Zomato, Blinkit and Amazon. Poor remuneration to BC field agents, and in general, the better payout terms offered to boots-on-the-ground by retailers is making retention of the former in the bigger cities and towns a matter of concern.

 

So much so that business correspondents are now moonlighting as delivery agents for quick-commerce firms to make some extra money.

 

“There has been attrition and retaining BC agents is a major challenge”, said D Tripathy, chief executive officer, Business Correspondent Resource Council. According to him, the genesis of the problem are the returns that BCs get. BC agents spend nearly Rs 1 lakh-Rs 1.5 lakh for opening kiosk points with their money. “During first six months, there is not much income. Still some banks give targets and if it is not achieved, the commission is reduced”, he added.

 

Until five years ago, the average commission paid to BCs was nearly Rs 10,000-Rs 11,000 per month, which has now reduced to Rs 7,000-Rs 8,000 per month. Nearly 35 per cent of the BC agents are getting less than Rs 5,000 per month, while 15 to 20 per cent are getting less than Rs 3,000 per month. Banks are also using BCs to outsource activities like deposit mobilisation, loan recovery, account opening drives, and e-kyc updation.

 

There are 2.5 million BC field agents. The quick commerce industry employs about 10 per cent of that. Estimates put the number at about 260,000, which includes about 200,000 delivery agents and 60,000 dark store workers, according to a TeamLease Staffing estimate early this year.

 

According to industry estimates, delivery agents for qcom firms typically make less than Rs 20 per delivery, with some incentives payouts for extra deliveries or if they complete a certain number of deliveries in a day. Besides this, they also get to keep the entirety of whatever tips they get from customers.

 

Then there is the issue of sustainability of such gig work. A June report, based on a study conducted by the labour ministry-affiliated VV Giri National Labour Institute (VVGNLI), found that such work - which covered cab and ride pooling, beauty & wellness, parcel delivery, and food/grocery delivery - can pose challenges for sustained earnings and skill enhancement due to income instability, lack of benefits, and limited opportunities for professional development. Only 23 per cent of respondents viewed gig work as a means for building a career or upskilling in the long run, while 54 per cent saw it solely as a ‘subsidiary job’

 

In contrast, BCs add significantly more value through their work; in fact, business correspondents bring in more business than branches for banks. The Reserve Bank of India’s (RBI’s) Report on Trend and Progress (T&P: 2023-24) shows that basic saving bank deposits account (BSBDA) opened via branches stood at 2,768 lakh (number of accounts) and the amounts involved was Rs 1,46,306 crore, the same through BCs stood at Rs 4,290 lakh and Rs 1,53,489 crore, respectively.

 

The BCRC raised its concerns with the Department of Financial Services DFS last fortnight and cited rising cost towards investment in technology, inspection, monitoring of outlets, and training of BC agents. A related issue was the security deposit some banks are stipulating at Rs 25 lakhs to Rs 1.8 crore for 1,000 kiosk points.

 

(With inputs from Udisha Srivastav) 

Progress in Financial Inclusion Plan 

(Source: Reserve Bank of India)