'With higher rentals, cost of Aadhaar devices and the know-your-customer paraphernalia, the commercial viability of the BC network is certainly to be looked at.'
The nearly two-decade old business correspondent (BC) network needs attention.
Remuneration is a sticking point and retention of field agents has become a matter of concern even as banks use the network to save on last-mile financial inclusion costs.
Talks are on if the agents can be used to vend other financial services and products.
Anand Kumar Bajaj, founder-managing director (MD) and chief executive officer of PayNearby, spoke with Raghu Mohan/Business Standard in a telephone interview.
The BC network was rolled out nearly two decades ago. Is it time to be reimagined?
Two decades ago, financial inclusion with BCs at the last mile was envisaged with limited technology.
But technology has multiplied manifold and enabled core services to citizens through the BC network.
Early-stage rampant account opening has helped achieve a large part of this goal; and now, mostly only transactional work is left - of giving access to cash deposit and withdrawals.
With a very stable technology with limited functionalities, a large network has spanned out.
And the entire framework has to be relooked like telecom.
In telecom, there were only a few agents who would issue SIM cards and do know-your-customer diligence.
But around them, there were millions of agents, and retailers who would recharge.
Banking is evolving in a similar manner. Fewer agents helped open accounts.
And now, many more agents are around to facilitate cash-in cash-out to citizens, just like merchant transactions at point-of-sale or UPI-QR transactions.
What other products and services can be sold on the BC network?
The RBI (Reserve Bank of India) has been forward looking. When they used the term BC, it was not banking correspondent, it was business correspondent.
And business is not only banking; it is also about insurance, investment, credit, and commerce.
You should look at BCs as a base network of trusted touchpoints across the country.
These have earned trust during pandemic lockdowns by delivering government subsidy to citizens.
The trust level is almost sovereign-grade.
The network can be relevant for rural service obligations of the insurance sector, as announced by the Insurance Regulatory and Development Authority of India - it wants last-mile insurance for all by 2047.
Along with insurance, credit technologies have also evolved with the RBI Innovation Hub building the Unified Lending Interface.
Then you have account aggregators: The Open Network for Digital Commerce, and Open Credit Enablement Network.
The whole combinatorial force will help credit to be sachetised at Rs 5,000 rather than a Rs 5 lakh minimum ticket that a banker would do today.
You don't need physical documentation like you do for a Rs 5 lakh loan. And BCs can offer assistance on the ground for the digital infrastructure.
But this would also call for a rehaul of BC remuneration...
With higher rentals, cost of Aadhaar devices and the know-your-customer paraphernalia, the commercial viability of the BC network is certainly to be looked at.
New services should be made commercially viable along with the base service, so that agents do not give it up for more remunerative work.
For example, if insurance gets you 20-25 per cent commission, it should not happen that BCs stop offering banking services.
Take the pricing of the Aadhaar Enabled Payment System (AePs) or micro-ATMs: Align its pricing with that for ATMs transactions.
Pricing of micro-ATMs transactions is at half-a-per cent of the ticket size or Rs 15, whichever is lower.
But for ATM transactions, it has moved up to Rs 17, and now there is talk of it being topped off Rs 21-22.
You see, there is a need for pricing parity of micro-ATM transactions with those at ATMs.
So many customers are being served from a local kirana store which acts as BCs without any additional fixed cost to the bank.
If the bank itself had to set up a branch, it would not have been viable. The BC network needs to be made commercially viable.
Do you think the BC network is getting affected by the field agents of Amazon, Blinket or Swiggy, given that the remuneration offered
As I see it, competition for limited resources in the system is intense. Be it shelf space at shops, mindshare of merchants, delivery and logistics providers or capital deployment.
In this hypercompetitive environment, resources gravitate towards high margin opportunities.
Hence, it is good to keep our resource partners engaged with more and new revenue opportunities through our platform.
The advantage in the digital world is that after the initial momentum, the network effect is triggered and helps harness the market digitally to create a multiplier effect.
Your views on the training of agents
A 900-page test manual has been created by the Indian Institute of Banking and Finance in a few languages.
A BC has to pay Rs 2,800 for the manual and another Rs 600 for the test proper, which many are not confident of passing.
All we are saying is that please granularise training like we have sachetised banking services.
Modularise, and make it online so that retailers - who work as BC agents - can get trained for a specific service for their area needs; you can scale later when customers demand more products and services.
In any case, they need not know treasury management or how to do debt recovery (as they are not into lending).
Feature Presentation: Aslam Hunani/Rediff.com
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