Business correspondents seek grant, equity funds for capacity building

The Business Correspondent Resource Council has sought the setting up of infrastructure and equity funds to strengthen last-mile banking, citing NSFI goals and RBI findings

The Business Correspondent Resource Council (BCRC) has sought the setting up of an Infrastructure Grant Fund and Business Correspondent Equity Fund for capacity building in the BC channel.

 

“The request is part of BCRC's demand ahead of the Budget, but comes in the wake of the release of the National Strategy for Financial Inclusion (NSFI): 2025-30 last month,” said a source. NSFI has observed that the last mile reach of financial services needs to be improved. Further, the National Institute of Bank Management - set up by the Reserve Bank of India (RBI) - which was tasked to suggest measures for improving the BC network last month submitted its report, which is yet to be made public. Different stakeholders, including banks, BCs and the central bank, are expected to roll out revisions this year.

 

The demand to set up capacity building architecture for BCs also builds on the C Rangarajan committee report on Financial Inclusion (January 2008) which was for funds being provided to the network.

 

The BC model acts as a critical lifeline in disbursing last-mile benefits to people, especially in rural areas of the country. During the pandemic, transactions routed through BC outlets witnessed a significant surge crossing more than 94 crore transactions accounting for ₹2.25 trillion during 2020-219. The latest Report of Trend and Progress of Banking in India FY25 says 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 trillion. BSBDAs raised through BCs stood at 4,491 lakh accounts and the amount was ₹1.74 trillion. Compared to this, the same via bank branches was 2,751 lakh accounts and ₹1.54 trillion.

 

An all-India survey conducted by the RBI on BC operations during January-March 2024 had noted that around 63 per cent of BCs (covered in the survey) were in rural areas, 23 per cent in semi-urban areas, and 14 per cent in urban areas. The survey covered 13,274 BC outlets in 31 states and union territories involving 154 districts.

 

The NSFI report, in its assessment of supply-side impediments in the BC network, said the presence of a significant number of non-dedicated outlets in the ecosystem was a matter of concern. This is because as financial services were not their primary business, it diluted the access and quality of financial services available at these outlets, especially in the areas where BCs were the only or primary modes of access to financial services. Representation of women in the BC agent workforce also needed reinforcement, it noted.

 

Then, remittances and cash in/out services (when you deposit or withdraw cash at BC outlets were the most commonly provided services. Some BCs also provided services relating to savings, recurring, and fixed deposits. However, other services, such as insurance, micro-pension, loans, overdrafts were provided only at select BC outlets. Hence, there was a possibility of deficiency in the uniform availability of services in areas entirely dependent on BC outlets.

 

There was a lack of standardisation in the services offered by BCs, due to absence of any prescribed minimum standard set of services to be provided by BCs, with proper signage and bank linkage. As a result, it was difficult to properly anchor and monitor the customer expectations and the service delivery. Insufficient and lack of timely remuneration was observed as a major reason for inactivity, service apathy, and certain unscrupulous practices amongst BCs. The lack of a fixed component of remuneration as a constraint was highlighted by several BCs during the survey.

Snapshot of the BC business

 

• The National Strategy for Financial Inclusion (NSFI): 2025-30 has noted last-mile reach needs improvement
• The National Institute of Bank Management has suggested measures to improve BC network; report yet to be made public
• An RBI survey found that around 63% BCs were in rural areas, 23% in semi-urban areas, and 14% in urban areas
• RBI 'Report of Trend and Progress of Banking in India FY25' found basic savings bank deposit accounts (BSBDAs) raised through BCs stood at 4,491 lakh accounts, with balance of ₹1.74 trillion. BSBDAs via bank branches was 2,751 lakh holding ₹1.54 trillion