Empowering the last-mile banker

Business correspondents who do the heavy lifting in financial inclusion may finally get their due, reports Raghu Mohan

- Raghu Mohan

‘The stageis set for an overhaul of the two-decade-old business correspondent (BC) network, the world’s largest boots-on-the-ground channel with 2.5 million agents in the field.

The National Institute of Bank Management (NIBM), which was tasked to suggest measures for the same, has submitted its report; and stakeholders — banks, BCs and Mint Road —are expected to roll out revisions next year.

Atits heart is the viability and upgrade of the channel —anda review of three aspects causing heartburn. The first is a national certification standard tiered into basic, advanced, and specialised levels to ensure consistent agent competency, compliance, and customer trust. The second isa diversified revenue model; and the third is the recognition of the %23,000crore plus annual value-add by BCs (to banks) by increasing their compensation asa strategic investment toimprove cross-sell, bad-loan recovery, and branch cost efficiency ratherthan san expense. Taken together, itadds tothe new reality that the BC channel will have to be viewed for what it is: An outsourced commercial venture. The pointis: Who is going to bear the costs of it? Say, fortraining.

Counting the cost

“The costs involved in training BCs should be borne by banks. After all, banks do gain significantly from the channel. Like reduced branch and operational costs, which they otherwise would have to bear,” says VS Das, former executive director, Reserve Bank of India (RBI). The central bank’s ‘Report on Trend and Progress (T&P: 2023-24)’ has it that basic saving bank deposits accounts (BSBDAs) opened via branches stood at 276.8 million and the amount involved was %1,46,306 crore. The same through BCs was 429 million and %1,53,489 crore.