Business correspondents (BCs) have played a stellar role in increasing the reach of banking services to the unbanked and underserved segments across the country. And the numbers prove it.

Of the 72 crore basic savings bank deposit accounts (BSBDAs), including the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, that were opened as of December-end 2024, 62 per cent came through BCs and the rest through bank branches, according to the latest RBI data.

Further, of the total outstanding balance of ₹3,04,715 crore in BSBDA accounts, the balances in accounts opened through BCs and bank branches accounted for 52 per cent and 48 per cent, respectively.

As part of efforts to promote financial inclusion and bring vast sections of the population into the banking fold, the RBI, in November 2005, asked banks to make available a basic ‘no-frills’ banking account, either with ‘nil’ or very low minimum balance, as well as charges.

In 2012, in order to do away with the stigma associated with the nomenclature ‘no-frills’, banks were directed to offer BSBDAs.

This account doesn’t require maintenance of minimum balance and earns the usual interest on savings.

For the debit card, there are no issuance or annual maintenance charges.

The free services in BSBDA include deposit and withdrawal of cash; and receipt/ credit of money through electronic payment channels or by means of deposit/ collection of cheques at bank branches and ATMs.

In August 2014, the government gave a big push to financial inclusion through PMJDY accounts, providing one basic bank account for every unbanked adult. These are in the nature of BSBD accounts, with an additional facility of a RuPay debit card with accident insurance coverage of ₹2 lakh and overdraft facility of up to ₹10,000.

Under the BC model, non-governmental organisations/ microfinance institutions can act as BCs.

Shoulder to the wheel

The scope of a BC’s activities includes 44 services such as account opening, cash deposit and withdrawal; receipt and delivery of small-value remittances/ other payment instruments; disbursal of small-value credit, recovery of principal/ collection of interest; sale of micro-insurance/ mutual fund products/ pension products/ other third-party products; Aadhaar-enabled payment services (AEPS); and direct benefit transfer (DBT) disbursals.

While BCs have ratcheted up impressive numbers on the financial inclusion front, their remuneration is nothing to write home about.

There are 956 corporate BCs, both at the national and State levels, which employ over a million agents/ ‘bank mitras’ at customer service points (CSPs).

Dharanidhar Tripathy, MD and CEO, Business Correspondent Resource Council (BCRC), observed that more than one crore transactions are conducted daily through the BC channel, mostly in rural and interior places.

Further, more than 80 per cent of the enrolments in social security schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), and Atal Pension Yojana (APY) have been through BCs.

Poor incentive

While BCs serve as a critical link between underserved populations and the formal banking system, they face several challenges, including low commissions, high costs and inconsistent transaction volumes (especially after UPI-based transactions picked up), difficulties in float management, and reconciliation delays.

Tripathy estimated that, on an average, 15 per cent of BC agents earn less than ₹3,000 per month as commission; 30 per cent get ₹3,000-5,000; 35 per cent get ₹5,000-10,000; and the rest get above ₹10,000.

He noted that CSPs/ bank mitras in the North-East, left-wing extremism-affected districts, desert areas, hilly states, and other difficult centres suffer the most due to a low commission structure and reduced potential.

Seema Prem, co-founder and CEO of corporate BC FIA Global, said: “Since we’ve come into the (BC) business (in 2012), there has been zero hike in the commission banks pay us... the commissions have not kept pace with inflation. So, our channel is actually bleeding.”

Significant savings

Prem underscored that last year, ₹1,50,000 crore worth of low-cost deposits flowed into the banking system through this channel. Assuming a net interest margin of 3.5 per cent, the income for banks is ₹5,250 crore. “The average transaction cost at a BC point is ₹37; at an ATM it is ₹60; and at a branch it is ₹80-120... So, some of the savings can be passed on to BCs,” she said.

She opined that banks should offer some form of subsidy, to ensure a fixed income for the bottom 20 per cent of BC points, which cater to villages with less than 500 residents each.

Pointing out that BC commissions have not been revised since 2014, despite increased service costs, inflation, and higher operational risks (including constant upgrades and changes in technology), BCRC’s Tripathy called for establishing a remuneration review committee comprising the Department of Financial Services, RBI, NPCI, industry bodies, and banks.

The commission structure could be linked to the Consumer Price Index (CPI) and a transparent and scalable formula could be arrived at for periodic commission adjustments across services and geographies.

Given that financial inclusion is one of the priorities of the government, BC industry players fervently hope it will step in to do a good turn to BCs, who toil to provide last-mile banking services in the hinterland.

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Published on June 22, 2025