- Financial relief for Business Correspondents
- Transaction failures and customer angst
- Drop in remittances and outlook
- Liquidity challenges of BCs facilitating credit
- MSME and KCC loans through BC channel
New Delhi, June 4, 2020: The Business Correspondents Federation of India organized a round table to discuss the contribution of the Business Correspondents during the lockdown and the role played in providing cash to the rural regions. The round table was attended by Sub-K, FIA global, Nearby, Fino Payment Banks, Oxigen, and SaGgraha. Business correspondents are playing a crucial role in financial inclusion, helping customers, especially in rural areas, where banking services are limited.
The industry demands the support for Business Correspondents from the central government of Rs 5,000/- per month, w.e.f. April 2020 onwards along with Health & Life Insurance cover for their uninterrupted services during the inconvenient times and most uncertain times in 6 months ahead. The appeal is being made to banks as well to keep the BC channel afloat with liquidity support to Corporate Business Correspondents who facilitate credit to low income communities through a large field force much like microfinance institutions.
The sector leaders predict a return of remittance after a much higher decline rate in March – mid-May. Prominent players have either started witnessing a rising curve or are expecting a rise in the transactions. Digital transactions are on the rise as witnessed in May 2020. AEPS as well as UPI transactions are expected to lead the way. BC network can be leveraged to source MSME loans which act as a fuel in recharging the economy. Hence it is a crucial juncture for the government and other stakeholders to view BC networks favourably.
Talking about the current situation of the Business Correspondents, Sasidhar Thumuluri, Chairman, BCFI & MD & CEO, Sub-K IMPACT Solutions, said, “Business Correspondents have emerged to be more critical than ever. Be it Agent BCs who are typically micro-merchants doubling up as banking outlets or field staff employed by Corporate BCs, the reach and connect this distribution channel provide is unmatchable. Thanks to PMJDY, various innovations unveiled by NPCI, proactive banking system and determination of Corporate BCs, today there are more than 8 Lakh touch points linked to various banks serving nooks and corners of the country. During COVID-19 lockdown more than 80% agents have worked tirelessly to meet the demand for money, especially enabling the withdrawal of DBTs released by the govt as a part of PMGKY and other schemes. With the gradual opening up of the economy, role of BCs will become even more important as cash starts flowing into the system, loans start getting repaid and new loans disbursed.”.
Additionally, Seema Prem, CEO, FIA Global, said, “Banks should leverage the extensive digital distribution network they have created for turbo charging MSME loan sanctions. Business Correspondents are ideally placed with their extensive reach and connect with last mile customers. There has been an overall decline in the range of viable transactions at the banking outlet. The effort and cost of servicing a customer has gone up significantly without a corresponding increase in a Bank Mitra’s income. BCFI requests the government to consider a fixed remuneration of Rs.5,000 per Bank Mitra for the next 6 months so that the Bank Mitras continue to remain viable and are able to provide uninterrupted service to PMJDY customers.”
Commenting on the discussion, Amit Jain, Chief Business Operations, FINO Payments Bank “Business Correspondent has been at the fore-front of providing Banking and related Financial services and their role has been un-precedent given the challenges citizens would have faced during 2 months of lock-down. Thanks to the JAM trinity and the proliferation of 8 Lakhs+ Business Correspondent in 7 Lakhs+ villages in the country, we have been able to manage the cash un-availability crises. In coming days when we get used to live with COVID & even during Post-COVID era, BCs will play larger role as essential services providers by maintaining the cash availability equilibrium in the remotest part of India. India can rest assured that cash will be available to them in worst of the situations, thanks to BC Network.”
Anand Kumar Bajaj, MD & CEO, PayNearby (NearBuy Technologies), further added, “With sudden spurt in DBT volumes, technology infrastructure of entire ecosystem went through testing times and came out stronger. With the help of NPCI and Banks, 8 Lakh BC Agents put up a fantastic front in helping financial access by crores of citizen. Now that the network of BC Agents has been highlighted, a habit formation of citizen to utilise the banking services at local Kirana shop has been accomplished. This will now enable additional services on these trusted rails. The confidence demonstrated by RBI governor in the BC industry, we stand stronger to bring financial liberation to India, sooner.”
Sunil Kulkarni, Chief Business Mentor, Oxigen, said, “Domestic Remittance predominantly from urban to rural India suffered twin blows of shops being closed and migrants not being given wages, resulting into significant reduction in domestic remittance with in some cases as high as 70% reduction in volume in April. Players who have services in both Aadhaar cash out in rural as well as Domestic Remittance could partially recover through DBT volume, however Domestic Remittance segment will continue to remain under pressure due to lower volume for short term/medium term.”
“Corporate business correspondents in partnership with various banks are engaged in building and monitoring assets also. Majorly into JLG and MSME loans. Leveraging technology, Tab based origination and Collection process has made the process smoother and efficient in credit processing. Directly providing employment to approx. 20,000 employees and managing 10,000CR book across country. Banks able to reach and deliver better with partnership of BCs with good Credit Quality.”, added Harish Raghu, CEO, SaGgraha
Sasidhar Thumuluri, added, “BC network is ripe and ready to source and service loans to street vendors, farmers and MSMEs as the economy limps back into action. Government and RBI have announced various measures to stimulate the economy, especially micro and small enterprises. With the wide distribution network in the form of merchant touch points and trained manpower, BC channel can offer the reach and results in equal measure in this endeavour. Hence, we believe BCs should be taken into confidence while enabling financial access to MSMEs and farmers in this Unlock phase and beyond.
Finally, we would like to say that we will stand firmly alongside the government and larger financial system in ensuring that financial inclusion and economic stimulation happen hand in hand. It is high time the channel is gets its due attention.”
Business Correspondent Federation of India –
Business Correspondent Federation of India (BCFI) is the national federation of Corporate Business Correspondents (CBCs) and Agent Business Correspondents (ABCs) in India. It is a not-for-profit organization that aims to promote responsible finance by systematizing and harmonizing the delivery of financial services to the poor through the critical last mile i.e. the ABCs. The federation interalia also does policy advocacy, promotes financial literacy and customer awareness. BCFI undertakes studies, workshops/conclaves and supports collaborative development activities related to financial inclusion in general and the BC sector in particular. The federation works with its stakeholders towards setting up a quality network, standardized systems and processes that address both supply and demand side challenges holistically.