2013 India: National Survey of
Branchless Banking Agents
Authors: Gregory Chen, N. Srinivasan & Aimthy Thoumoung

16 Decem...
2
Photo credit: Sudipto Das
Main Findings: leading indicators show stagnation

45%

2012

Daily Transaction Frequency

2013

40%
35%

Agents in other ...
Main Findings: few signs of progress by 2013

Customer service points are more experienced: after 8 years of
Business Corr...
2013 Survey Background
Photo credit: IMRB

5
2013 Survey: Background

In 2006 India’s central bank (Reserve Bank of India) permitted banks to
use Business Corresponden...
2013 Survey: Background
BC guidelines in place for 8 years, 2 national surveys 15 months apart

Number of RBI reported
BC*...
2013 Survey: Sample Selection

All 5 regions: North, South, East, West & Northeast of India
Prioritized 15 states for nati...
2013 Survey: Sample Selection

220

158

CSP Sample

75

Reached & surveyed 1,254

30
2
15

75
68
67

117
117

43

95

108...
Agent Characteristics
Photo credit: IMRB

10
Technology used and CSP demographics held steady

CSP Technology
60%

53%

57%

50%
%
CSPs

2012

40%

2013

26%

30%

22%...
Rising proportion of corporate and individually contracted CSPs;
offset by a decrease in specialized BC CSPs

CSP Categori...
Location of CSPs
Larger proportion of moving point

Still predominantly rural

100%

100%

90%

90%

13%
24%

30%
80%

47%...
CSPs gaining more experience, even as some drop out

2012

The typical CSP has many more months
of experience today

2013
...
Value to Customers
Photo credit: Quicksand

15
Reliability problematic in 2012, worse by 2013

CSP
availability

Tried to contact 2,358

1,254 surveyed

1,104 not possib...
Accounts open quickly; but speed of account activation
slower than in 2012
40%

MINUTES: Account opening time

35%
30%

20...
CSPs continue to provide primarily savings and payments
2012
2013

Product Offering

120%

97%

100%

88%

80%

%
of
CSPs
...
CSP Motivation
Photo credit: IMRB

19
CSP earnings remain low – near minimum wage;
No change from 2012 to 2013
14%

No increase in CSP income from 2012 to 2013
...
Majority continue to rely on CSP work as sole income;
Increase in Kirana Shop CSPs
Sole
Income (53%)

Other
Income (47%)

...
Monitoring of CSPs by BC/Banks improves, but other
measures of support worsen
2012

2013

Visited by Bank/BC in prior
mont...
Attrition rate 25-34% annually
860 Surveyed in 2012
Tried to contact again in 2013
(15 months later)

500 remain agents

A...
CSPs are motivated by qualitative aspects of CSP work, but
low pay will continue to push CSPs out
Reason for continuing CS...
Learning from CSP
variations
Photo credit: IMRB

25
CSPs delivering G2P perform better on a number of indicators

Only 23% of CSPs offer G2P services:
Most CSPs established t...
CSPs at fixed locations who earn other income, are
substantially different than other CSPs

Daily transactions (8) are low...
Variation by income from CSP activities

2013 Survey Data
CSPs Above
Median
Income

CSPs Below
Median
Income

Rural vs. Ur...
Variation by income from CSP activities

2013 Survey Data
CSPs Above
Median Income

CSPs Below
Median Income

Fixed Point
...
Advancing financial inclusion to improve the lives of the poor

www.cgap.org

30
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2013 India: National Survey of Banking Agents

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A survey of banking agents (customer service points) across India from September/October 2013. Trend lines are established based on comparisons to the same survey carried out 15 months earlier.

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2013 India: National Survey of Banking Agents

  1. 1. 2013 India: National Survey of Branchless Banking Agents Authors: Gregory Chen, N. Srinivasan & Aimthy Thoumoung 16 December 2013 1
  2. 2. 2 Photo credit: Sudipto Das
  3. 3. Main Findings: leading indicators show stagnation 45% 2012 Daily Transaction Frequency 2013 40% 35% Agents in other countries are more active with higher median transactions per day: 30% Kenya: Tanzania: Uganda: India: 25% 20% * MicroSave 15% 10% No increase 2012 to 2013 Transactions Per Day > 200 191 to… 181 to… 171 to… 161 to… 151 to… 141 to… 131 to… 121 to… 111 to 120 91 to 100 81 to 90 71 to 80 61 to 70 51 to 60 41 to 50 31 to 40 21 to 30 11 to 20 1 to 10 0% 101 to… 5% 0 % Of Customer Service Points (Agents) 62 * 35 * 34 * 9 3
  4. 4. Main Findings: few signs of progress by 2013 Customer service points are more experienced: after 8 years of Business Correspondent guidelines, most CSPs active for >24 months Some positive outliers, but in aggregate signs point to stagnation from 2012 to 2013 • Low level of client use • Low level of CSP compensation Strong evidence of viability problems in bank-led BC deployments: • Push into rural areas • Geographical targets met, but banking activity low Little evidence that the present trajectory will contribute much to financial inclusion or financial sector development, despite increasing years of experience 4
  5. 5. 2013 Survey Background Photo credit: IMRB 5
  6. 6. 2013 Survey: Background In 2006 India’s central bank (Reserve Bank of India) permitted banks to use Business Correspondents (BCs) to organize networks of customer service points (CSPs) – also commonly known as banking agents. National surveys of CSPs have been undertaken jointly by CGAP and the College of Agricultural Banking (an affiliate of the Reserve Bank of India) in March/April of 2012 and again in September/October 2013. MicroSave provided critical input as a partner. This powerpoint provides highlights of the survey results from 2013. The earlier results from 2012 can be viewed at: http://www.slideshare.net/CGAP/a-survey-on-bc-csps-in-india-2012 The College of Agricultural Banking expects to complete comprehensive report on the 2013 survey data in the coming months. a 6
  7. 7. 2013 Survey: Background BC guidelines in place for 8 years, 2 national surveys 15 months apart Number of RBI reported BC* Customer Service Points is increasing 250,000 200,000 Number Of CSPs *Business Correspondent (BC): regulatory category created by Reserve Bank of India which allows organizations to partner with banks to set up one or more customer services points (bank agents) 150,000 100,000 50,000 2006 2007 2008 2009 BC* Guidelines in Place 2010 2011 2012 2013 15 month interval 2012 Survey 2013 Survey 7
  8. 8. 2013 Survey: Sample Selection All 5 regions: North, South, East, West & Northeast of India Prioritized 15 states for nationally representative coverage Drawn from bank lists of CSPs reported as active as of 31 December 2012 Tried to contact 2,358 CSPs Not Available Available 1,104 unable to survey: 983 not reachable: wrong phone #, no response 87 unwilling: stopped CSP work or unhappy with CSP work 1,254 surveyed are the sample Survey Details 13 September - 6 November 2013 Business hours, weekdays & weekends Local languages IMRB http://www.imrbint.com/ survey firm 8
  9. 9. 2013 Survey: Sample Selection 220 158 CSP Sample 75 Reached & surveyed 1,254 30 2 15 75 68 67 117 117 43 95 108 That work for: 7 Public Sector Banks 5 Regional Rural Banks 3 Private Banks 12 BC Companies* 64 Note: added 219 customer interviews to double check CSP responses * 592 of the CSPs surveyed were individuals contracted directly by banks and not through BC companies. 9
  10. 10. Agent Characteristics Photo credit: IMRB 10
  11. 11. Technology used and CSP demographics held steady CSP Technology 60% 53% 57% 50% % CSPs 2012 40% 2013 26% 30% 22% 20% 18% 18% 10% 3% 3% 0% POS+Card Personal Computer Mobile Phone None Demographic Profile Male 25-35 12th Pass or Graduate 2012 85% 47% 66% 2013 87% 46% 76% 11
  12. 12. Rising proportion of corporate and individually contracted CSPs; offset by a decrease in specialized BC CSPs CSP Categories 90% 80% 2012 2013 78% 70% 60% % CSPs 50% 40% 42% 38% 30% 20% 20% 10% 17% 5% 0% Specialized BCs Large Corporate BCs Individual BCs Specialized = BC companies whose primary business is managing CSPs Large Corporates = BC companies who have other business, but who also manage CSPs Individual = individual CSPs that are contracted directly by banks 12
  13. 13. Location of CSPs Larger proportion of moving point Still predominantly rural 100% 100% 90% 90% 13% 24% 30% 80% 47% 70% Moving Point 80% Non FI Village* 50% 40% 16% 60% 50% % CSPs 18% 70% 60% Urban 40% 70% 69% 30% 60% 30% 53% 20% 10% Fixed Point FI Village* 20% 10% 0% 0% 2012 Survey 2013 Survey 2012 Survey 2013 Survey * An FI (financial inclusion) village is location identified with less than 2,000 inhabitants targeted under a national financial inclusion plan established in 2010. Banks set geographic coverage targets against this plan. 13
  14. 14. CSPs gaining more experience, even as some drop out 2012 The typical CSP has many more months of experience today 2013 40% 36% 35% 33% 31% 30% 26% Between surveys 25-34% formally ceased their CSP operations (dropped out) 25% % CSPs 20% 20% 17% 15% 13% 10% 6% 6% 5% 5% 3% 2% 1% 1% 1% 1% 0% <3 4-6 6-12 12-24 24-36 36-48 48-60 >60 Months as CSP 14
  15. 15. Value to Customers Photo credit: Quicksand 15
  16. 16. Reliability problematic in 2012, worse by 2013 CSP availability Tried to contact 2,358 1,254 surveyed 1,104 not possible to survey 198 no transactions yet CSP readiness to transact 16% (198/1254) never transacted, increased from 5% in 2012. 48% (602/1254) technical capability that allows clients to transact at other CSPs, down from 65% in 2012 11% (134/1254) unprepared to transact at moment of survey, improved from 25% in 2012 16
  17. 17. Accounts open quickly; but speed of account activation slower than in 2012 40% MINUTES: Account opening time 35% 30% 2012 2013 Median remained at 10 minutes 25% % of CSPs 20% 15% 10% 5% 0% 1-5 40% 5-10 10-15 15-20 20-25 25-30 30-60 60-90 >90 DAYS: Account activation time 35% 30% % of CSPs Note: often in other countries account activation can be a few minutes or within 24 hours Median increased from 4 to 9 days 25% 20% 15% 10% 5% 0% 1 2 4 7 15 30 45 60 >60 17
  18. 18. CSPs continue to provide primarily savings and payments 2012 2013 Product Offering 120% 97% 100% 88% 80% % of CSPs Insurance offerings decreased while credit offering rose 60% 50% 52% 40% 31% 30% 23% 17% 20% 11% 12% 0% G2P P2P Savings Insurance Credit 18
  19. 19. CSP Motivation Photo credit: IMRB 19
  20. 20. CSP earnings remain low – near minimum wage; No change from 2012 to 2013 14% No increase in CSP income from 2012 to 2013 2012 12% 2013 10% Median stayed the same in 2012 and 2013 at ₹2,700 8% 180 CSPs surveyed in 2012 show little change in income in 2013 6% Urban CSPs median ₹5,441 three times rural ₹1,968 4% 2% >15 14.5-15 14-14.5 13.5-14 13-13.5 12.5-13 12-12.5 11.5-12 11-11.5 10.5-11 10-10.5 9.5-10 9-9.5 8.5-9 8-8.5 7.5-8 7-7.5 6.5-7 6-6.5 5.5-6 5-5.5 4.5-5 4-4.5 3.5-4 3-3.5 2.5-3 2-2.5 1.5-2 1-1.5 0.5-1 0-0.5 0% 0 % CSPs Income per month from CSP work (₹000s) 20
  21. 21. Majority continue to rely on CSP work as sole income; Increase in Kirana Shop CSPs Sole Income (53%) Other Income (47%) 30% +12% Fixed Point (52%) Kirana Shop Agriculture Salaried Self Employed Other 5% Moving Point (48%) 7% 1% 5% 0% +1% +3% 3% -5% 16% 0% 3% -2% +4% 7% -2% 0% -8% +4% 23% +4% -10% Denotes change from 2012 survey 21
  22. 22. Monitoring of CSPs by BC/Banks improves, but other measures of support worsen 2012 2013 Visited by Bank/BC in prior month 82% Improved 89% Visited by BC/Bank in prior week 60% Improved 72% Those paid on time 50% About the same 48% Received training 90% Worsened 85% Positively viewed Bank’s/BC Support 64% Worsened 58% 22
  23. 23. Attrition rate 25-34% annually 860 Surveyed in 2012 Tried to contact again in 2013 (15 months later) 500 remain agents Attrition rate (minimum): Attrition rate (maximum): 267 no longer agents 267/860 (267+93)/860 = 31% = 42% 93 unreachable (annualized to 25%) (annualized to 34%) Note: the rate used measures formal cessation of service by CSPs, but does not include dormancy of CSPs in either 2012 or for 2013. 23
  24. 24. CSPs are motivated by qualitative aspects of CSP work, but low pay will continue to push CSPs out Reason for continuing CSP work: 53% "Enhanced reputation / goodwill in the community“ OR "Personal choice” (decreased from 59% in 2012) 47% “Revenue / income generated” (increased from 41% in 2012) Satisfaction from CSP work: 82% Satisfied or Very Satisfied with "Enhanced reputation / goodwill in the community“ (same as 2012) Only 24% stated they were Satisfied or Very Satisfied with respect to “Revenue / income generated” (decreased from 32% in 2012) Attrition likely to continue as income expectations are not being met, despite positive perception of enhanced reputation and goodwill. High number of rural CSPs testing CSP work as a long term livelihood opportunity and the willingness to remain may dwindle, especially since CSP compensation is close to minimum wage levels. 24
  25. 25. Learning from CSP variations Photo credit: IMRB 25
  26. 26. CSPs delivering G2P perform better on a number of indicators Only 23% of CSPs offer G2P services: Most CSPs established to meet financial inclusion geographical targets and majority are still not linked to G2P delivery 92% of G2P CSPs work in rural areas; despite greater challenges in rural areas G2P delivery has a number of positive correlations: G2P CSPs Non-G2P CSPs Median Transactions per Day 15 8 Monthly Earnings – Rural (₹ ) 2,497 1,865 Readiness to transact 95% 88% Local Language Forms 50% 38% 26
  27. 27. CSPs at fixed locations who earn other income, are substantially different than other CSPs Daily transactions (8) are lower than other CSPs (10) However, • Earn more than double the monthly income • Hold 2-4 times the amount of cash/float liquidity 27
  28. 28. Variation by income from CSP activities 2013 Survey Data CSPs Above Median Income CSPs Below Median Income Rural vs. Urban 37% vs. 57% 63% vs. 43% Lower income for rural Median Cash In Hand ₹ 19,122 Median Settlement Account Balance ₹ 23,889 9,827 Proportion offering Credit services 20% 14% Variable Observation 5,972 CSPs who make more money also hold more float CSPs who earn more are more likely to offer credit 28
  29. 29. Variation by income from CSP activities 2013 Survey Data CSPs Above Median Income CSPs Below Median Income Fixed Point 57% 43% Moving Point 25% 75% POS + Cards 33% 67% Mobile Phones 60% 40% PC 47% 53% Karnataka 89% 11% Orissa 79% 21% Tripura 73% 27% Variable Type of CSP Technology Category Top 3 States for Rural CSPs Bottom 2 States for Rural CSPs Uttar Pradesh 12% 78% Tamil Nadu 20% Observation Fixed Point CSPs correlated with higher income Mobile Phones associated with higher income Significant variation in earnings by state Tripura from North East in the Top 3; remote region not necessarily a barrier to higher income 80% 29
  30. 30. Advancing financial inclusion to improve the lives of the poor www.cgap.org 30
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