Money & Banking

Business correspondents' pay likely to be raised

Anjana Chandramouly Bangalore | Updated on November 15, 2017

The Finance Ministry has recommended higher remuneration for business correspondents of banks who facilitate financial inclusion.

According to bankers, the minimum basic remuneration for BCs will now be Rs 2,500, besides fees for every transaction they carry out. For instance, for opening a savings bank account, the BC will now get Rs 20 per transaction, and Rs 5 for opening a recurring/fixed deposit.

The new process will ensure uniform and increased remuneration for BCs, and better monitoring of their work.

Bankers point out that till now BCs were paid anywhere between Rs 1,500 and Rs 2,500 per month based on the volume of transactions.

The attrition rate was around 40 per cent, mainly because the remuneration was not good enough, they say. Though it is only optional for banks to move on to the common platform now, bankers say that eventually the system will move towards the ‘one cluster/State, one technology provider' model.

Banks' costs

The revised remuneration structure would almost double banks' BC remuneration costs. The Ministry has also recommended a 10 per cent increase in remuneration after three years.

“The Department of Finance has divided the entire country into 20 clusters, and 12 leader banks have been asked to come out with a common request for proposal (RFP) for technology providers,” Mr K. P. Muralidharan, General Manager – Syndicate Bank and Convenor – SLBC Karnataka, told Business Line. Some of the leader banks include SBI (four clusters), Indian Overseas Bank, Bank of Baroda, Bank of India, Punjab National Bank, Andhra Bank and Syndicate Bank.

For instance, Syndicate Bank has uploaded a common RFP on its Web site, being the lead bank for the Karnataka and Goa cluster. State Bank of India has already completed the technical bid for Maharashtra, where the pilot is being carried out.

The BC model will now work on a ‘one State/cluster, one technology provider' platform; for instance, all the 3,281 financial inclusion villages in Karnataka and 42 villages in Goa will have one technology provider or corporate BC, which will carry out the banking facilities in these villages through its BC agents.


Published on May 22, 2012

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