Business Correspondents (BCs) played a crucial role in delivery of Direct Benefit Transfer (DBT) money to the lower section of the pyramid in the rural region, according to recent RBI Annual Report. It was BCs who played as an extension to bank branches for disbursal of cash when access to ATMs was a significant challenge during the lockdown when reaching out to banking services.
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Despite all the difficulties during these grim times, BCs (primarily a role played by Kirana stores or small retail shops) worked diligently to ensure that the poor did not suffer. Without the sincere efforts of this channel, the lockdowns would not have been largely peaceful.
Today with the digitization and innovation of fintech, the BC model has emerged as the chief delivery model for banks to expand last-mile outreach in unbanked, underserved areas of the country.
“At Spice Money, we have an Open Network for Assisted Digital Distribution platform wherein we can integrate multiple partners and take their services to the last mile with the help of our million-strong network of correspondents, known as Adhikaris (nanopreneurs),” said Sanjeev Kumar, Co-founder & CEO, Spice Money.
This network of BCs spread across the country has been used as low-cost delivery channels for providing financial services to people visiting them particularly in rural areas that are financially excluded from mainstream banking. The BC model is powered by technology-oriented tools such as point of service handheld devices, mobile phones, biometric scanners and even micro ATMs.
Earlier, this segment experienced marginal growth, but the pandemic and digitization resulted a plunge in BCs i.e. more than 3000% rise in the past ten years.
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Digital transactions that have seen exponential growth over time have been one of the primary catalysts in the evolution of BCs. Even advanced level training awareness programs are also the reasons for the development of BCs as it enlarges their responsibilities in a graduated manner. For instance, when business correspondents reach a higher level of business volumes, they can be endowed with more significant services, including more comprehensive credit services.