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ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
BC Model: An effective way to 
reach financially excluded 
Presentation by – 
National Bank for Agriculture and Rural 
Development, India
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Need 
Extending outreach of the banking sector and Ensuring greater 
financial inclusion by addressing – 
 Supply side constraints such as Banker’s concern about low recovery and 
high transaction, coverage, limited staff, mobility and infrastructure; 
 Demand side issues such as Lack of awareness; High transaction costs at 
the client level due to expenses such as travel costs, wage losses, incidental 
expenses, opportunity cost; Documentation issues; Non-availability of 
customized products to suit the requirements 
 The need for comprehensive financial services encompassing savings, 
credit, remittance, insurance and pension products which the formal 
financial system has not been able to provide effectively in the rural areas.
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
India’s Challenges for outreach 
Population No. of 
Villages 
% of Total 
Villages 
% of Total 
Population 
Less than 200 1,14,267 17.9 1.24 
200 – 499 1,55,123 24.3 5.92 
500 – 999 1,59,400 25.0 14.18 
1,000 – 1,999 1,25,758 19.7 24.69 
2,000 – 4,999 69,135 10.8 32.22 
5,000 – 9,999 11,618 1.8 13.22 
10,000 and above 3,064 0.5 8.53 
Total 6,383,65 100 100 
Source : Census of India 2001
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Genesis of the BC model 
Khan Committee in 2005 recommended the use of BCs and BFs as 
intermediaries for accelerating the process of linking the large numbers 
of hitherto unbanked persons with the banking network and considered 
it a viable policy option 
 Indian Union Budget 2005-06 for the first time referred to “banking 
correspondents” as intermediaries to provide transactions on behalf of 
the banks 
 Dr C Rangarajan Committee on Financial Inclusion in 2008 advocated 
the use of Business Facilitator/Business Correspondent (BF/BC) models 
which riding on appropriate technology can extend the outreach of 
banking sector to financially excluded
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Scope of Activities/Services to be 
provided by BCs 
 To provide all non-financial support / facilitation services of Business Facilitator 
such as - 
 Creating awareness about savings & other products & education & advice on 
managing money & debt counseling; 
 Identification of borrowers & fitment of activities; 
 Collection & preliminary processing of loan applications and submission of 
applications to banks; 
 Processing & post-sanction monitoring and Follow-up for recovery 
 To provide Financial Services as "PassThrough" Agents such as - 
 Disbursal of small credit, Collection of small deposits & Recovery of principal / 
collection of interest 
 Sale of micro insurance/mutual fund products/pension products 
 Receipt & delivery of small remittances / other payment instruments
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Eligible individual/entities as BC or Who 
can be the Business Correspondent? 
 Post Offices; NGOs/ MFIs set up under Societies/ Trust Acts 
 Cooperative Societies 
 Companies registered under Indian Companies Act, 1956 
 Retired bank employees, ex-servicemen and retired govt. employees 
 Individual Public Call Office (PCO) operators, agents of small savings schemes of 
Government of India / Insurance Companies 
 Individuals who own petrol pumps /shops / medical / fair price shop owners 
 Authorised functionaries of well run Self Help Groups (SHGs) linked to Banks 
 Any other individual including those operating Common Service Centres 
 Non Banking Finance Companies
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
BC Model 
Every BC attached to a branch – designated as base branch 
under the oversight of a specific bank branch 
 To ensure adequate supervision over operations and activities of BCs 
 Distance between place of business of a BC and base branch is defined by 
regulator 
 To ensure that area covered is strictly within their eligible area of operation 
while engaging BCs 
BCs to conduct banking business at places other than bank premises 
Banks must have a Board approved Policy on BC Model adopted 
Arrangements for Risk Management to be in place
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
BC Model Contd… 
KYC Norms – 
Banks may use the services of BC for preliminary work relating to account 
opening formalities 
Payment of commission/fee – 
The banks may pay reasonable commission/fee to the BC but the BCs 
cannot charge any fee to the customers directly 
The banks (and not BCs) are permitted to collect reasonable service 
charges from customers in a transparent manner.
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Bank’s CBS 
Server contains 
account details 
of customer 
Corporat 
e BC 
Technical 
Service 
Provider (TSP) 
FI Server of corporate BC 
hosted by TSP & contains 
identification details of 
customer like biometric 
details 
Customer 
Bank 
When banks engage 
individuals as BCs, 
then the banks hire 
their own TSPs 
BC Model Contd…
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Progress and Penetration 
Branchless banking outlets 
further went up to 337678 
(out of which approx. 95% 
are BC outlets) by March 
2014 from 227617 in March 
2013
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Progress and Penetration Contd… 
- 
10,000 15,000 20,000 
34,174 
80,802 
141,136 
221,341 
337,678 
0 
50000 
100000 
150000 
200000 
250000 
300000 
350000 
400000 
2006 2007 2008 2009 2010 2011 2012 2013 2014 
Progress in establishing CSPs (Customer Service Points)
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
CSP Technology used 
53% 
26% 
18% 
3% 
57% 
22% 
18% 
3% 
0% 
10% 
20% 
30% 
40% 
50% 
60% 
POS+Card Personal Computer Mobile Phone None 
2012 
2013 
BC Model Contd…
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Progress and Penetration Contd… 
Number of Account 
holders increased to 
116.93 million by 
March 2014 from 
81.27 million in 
March 2013 
Similarly, the deposits 
doubled to USD 650 
Million by March 
2014 from USD 303 
million in March 2013 
Progress and 
Penetration
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
BC : Changing 
Lives 
at grass roots 
(Success Stories)
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Shahji Tukaram Patil (Seated, 
Right) says the nearest bank is 
miles from his village 
Dagdu Kisan Sutar (another 
BC) says that his becoming a 
business correspondent in 
Mahavade village makes sense 
as the village (that stands 
between thatched huts and 
traditional village houses with 
colourful motifs) lies about 10 
km from the nearest bank. 
Banking outreach extended to last mile
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Petty transactions made possible for 
needy one 
 Zohair Mustaq Qureshi (BC) says many of his customers are students who 
work part time and save a rupee a day 
 Ramkishore Yadav (BC) from Madhya Pradesh's Hoshangabad district says 
most of the people who come to him as customers are labourers looking to 
withdraw money. Only one in four people deposit money, mostly small 
amounts between Rs100 to Rs200. 
 Malubai Maruti Takde (Customer), a 55-year-old grandmother in a 
Maharashtra village, as a routine either deposits or withdraws a little cash from 
Patil for a saree, a gift for her grandchildren or just to go to the local fair.
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Making life easier for ultimate 
beneficiary 
 In Fauladpur village, Shanthosh has managed to save Rs 100 this week and is 
excited to know that her balance has reached Rs 759. 
Though the Financial inclusion server with her BC Rakesh Sharma is slow and 
the machine struggles to recognise the fingerprints of a few ladies at times 
but Shanthosh is happy she doesn't have to go to the local zamindaar. 
"Oon zamindari ke kaam se ye manne bhala laage. Zamindaar bhi paisa dena 
taal jaayo par Rakesh ko to kabhi bula liyo". (I like this mode of saving money 
more than lending or depositing with the zamindaar who used to refuse to 
pay money at times, but we can call Rakesh anytime we need money). 
 For Pappi, another local of Fauladpur village, it is the convenience. "Maare ko 
door jaana na jachchce" (I don't like to travel far to visit a branch).
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
BC Leading to financial literacy: 
distant dream come true 
 40-year-old Ramkishore Yadav (BC) from Madhya Pradesh's Hoshangabad district, 
was asked – 
“Do your clients understand deposits and withdrawals, or tenors and interests?” 
Yadav says they were mystified initially, but understood the concepts quickly. People 
quickly learnt and started using cards to deposit or withdraw cash. 
 Another business correspondent, Malkhan Singh of Madhya Pradesh's Panna 
district, says 
“it takes at least a year to convince customers about the benefits of banking”. 
Malkhan Singh, who comes from a family of farmers, says he visit gram sabhas in 
every one of Panna's 20 villages and explain the virtues of banking to villagers. 
These are among thousands of Business Correspondents, who are taking banking to 
the doorstep of people in far-flung villages across the country & helping mostly 
illiterate Indian villagers understand the basics of banking.
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Working as BC : boosting confidence 
leading to empowerment 
Dipali Patil (left), banking 
correspondent in a Maharashtra 
village, speaks little English and 
lives in a traditional house close to 
a field, far from the hi-tech world 
of India's cities. But she handles 
the gizmos in her hand with 
unusual flair. 
"Bluetooth se connect hota hai 
(They are connected through 
Bluetooth)," she says, with the air 
of a professional. Her tech-savvy 
manner and professionalism may 
seem incongruous, but they are 
not that unusual.
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Working as BC : boosting confidence 
leading to empowerment 
She adds that the gadgets have 
helped change her life in many 
ways: they have given her more 
confidence and taken her out to 
meet a lot more people. 
Similarly Archana Yuvraj Rohile 
(another BC) says proudly "People 
call me madam in the village, 
because I tell them what to do.
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Working as BC is not the only but an 
additional source of revenue for many 
 Patil, who works for Ratnakar Bank, says remuneration is not much. For every 
transaction, he gets a rupee as commission; 
 Similarly, the bank pays Rs 5 to Nandini Devi (another BC); an extra Rs 9 for 
every transaction of Rs 120; and for every amount over it, they get 50 paise 
extra. 
These are small amounts, but even Rs 500 earned in a village goes a long way for 
a BC given the fact that they can carry BC business without hampering with their 
traditional business 
 Take Dagdu Kisan Sutar, a 28-year-old carpenter from Mahavade village, for 
instance - Enthusiastically he says “I have about 70 customers whom I help 
when I am not bent over my carpentry tools in my workshop near my house
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
 Similarly, Archana Yuvraj Rohile (another BC) was not deterred by the small 
size of the transactions. 
 She used to work in Kolhapur, but did not get enough time with her husband 
and two children. 
 Returned to the village where she now does household work and tends to 
livestock until late afternoon when her husband leaves for work at a spinning 
mill. That's when she finds time to start her job as a village banker. She says 
“The government has appointed us for our benefit, that's why I do it.“ 
CSP with other source of income 
Working as BC is not the only but an 
additional source of revenue for many
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
BC Model : Make sense for bankers to 
opt for 
Given the fact that reaching the remote places is a mandate (Banks 
need to meet priority sector lending targets as well) and not an 
option – 
 Much better alternative than opening a branch – 
 Normally a rural bank branch can serve 3,000 to 4,000 families in 12 to 15 
villages within a radius of 15kms 
 A Bank branch may require more than 5 years to breakeven in unbanked 
areas in India 
The BC option potentially enables banks to reach out much faster and at a 
much lower cost.
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
BC Model : Make sense for bankers to 
opt for 
 Better quality of assets - Target clients are well known to the BC / CSP and 
enhances quality of assets 
 Corporate-Bank Synergy: Can enhance Brand equity, credibility & Business of 
the bank – 
 People recognize HUL for its strong distribution network taking its product to 
the remotest possible place in India which has given it unbeatable advantage 
over its competitors 
 Maruti India boast of having a service outlet at far off places. Similar is the case 
for Indian Postal Service Department as well as SBI brick & mortar branches. 
 Recently a mobile giant have made its network availability at the remotest 
possible place as its USP 
So having presence through BCs at the last mile can definitely enhance the brand 
equity as well as business of the bank. Serving far flung areas also has a social 
responsibility angle which enhance the trustworthiness, credibility and hence the 
business of the bank in long run.
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
BC Model : Bank perspective 
 Jayanta K. Sinha, Chief general manager (rural business) at SBI, concedes: "You 
cannot achieve what you could not in 200 years of branch banking in just six years 
with BCs. Give it some time.“ 
 Manish Khera, CEO of the Mumbai-based BC outfit, Financial Inclusion Network 
and Operations (Fino), grants you the point, “How many no-frill accounts did 
banks open in the first 60 years of Independence? Look at the figures now. Would 
they have achieved these numbers without us BCs? And it has been achieved 
without violating KYC norms." But also has reservations that if income from pure 
BC play were to reduce, it will prove difficult for them to stay invested. 
 "It provides last mile connectivity. But it has increased the cost of delivery and the 
bank is yet to see any meaningful returns on this investment, however, the 
increased footfalls at BC locations, an increase in their regular retailing business has 
been noticed, " says Ratnakar Bank's Head Gandhi. He is fine if retailers and FMCG 
companies were to piggy-back on BCs.
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Challenges/Constraints 
BC Viability issue- 
The existing regulations do not allow sufficient flexibility for the BC 
arrangement to be viable. 
Due to High cost-low margin model. 
BCs are not able to meet their costs and are often losing money in the 
initial years. 
Majority of the no-frills accounts opened under this model are not 
operational affecting viability of model. 
Low remuneration to people working as BCs
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Challenges/Constraints Contd.. 
Lack of professional orientation in BC staff leading to – 
 Poor maintenance of records 
 Delay the processing of loans, 
which subsequently generates a low volume of business for banks 
Lack of proper financial education of the clientele 
 A big barrier to the effective utilization of the banking facility provided to the 
clients through this model 
Computer based technology is an issue because of lack of standard-training 
and maintenance. 
Network connectivity issues particularly in hilly and remote areas
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Way Ahead 
Addressing Viability Issue – 
 Scale: Scale and Scale is the essence for sustainability. 
 Providing Range of services: Through a right mix of diversified products 
 Viability Gap Funding – Particularly in the initial years 
 3Ps: Patience, Perseverance and Passion of the team 
The banks need to invest in creating awareness & financial literacy 
SHGs should be roped in as BC 
The technology and infrastructure should be robust and cost effective. 
BCs need to be sufficiently compensated 
Addressing network connectivity concern at the earliest
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Conclusion 
 Financial inclusion business with the poor is different from selling usual 
airtime or small sachet of shampoos or noodles in rural areas. It has a long 
term horizon and pivots for success are trust of end customers and investors’ 
belief in the business model. 
 Bankers need to come out of myopia by looking at the bigger picture because 
It makes business sense for banks to invest in this model looking at the 
advantages in terms of increased brand equity, trust, credibility, asset quality 
ultimately impacting its top and bottom line positively in longer run. 
Given the right impetus by the banks and other financial institutions, the BC 
banking channel has the great potential to ensure the process of financial 
inclusion and bring the rural unbanked population within the banking fold
THANK YOU 
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
CSP with other source of income Success 
Stories (BC : Changing Lives at grass roots) 
47 
46 
33 
50 
71 
37 
43 
77 
40 
51 
19 
89 
44 
61 
100 
19 
0 20 40 60 80 100 120 
All 
Uttar Pradesh 
Rajasthan 
Maharashtra 
Gujarat 
Bihar 
West Bengal 
Assam 
Tripura 
Andhra Pradesh 
Tamil Nadu 
Delhi 
Orissa 
Madhya Pradesh 
Meghalaya 
Karnataka 
CSPs with other business - state wise (%)
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Progress and PenetrationProgress and 
Penetration Contd… 
Particulars Mar 2010 Mar 2013 Mar 2014 
BC Outlets in Villages (No.) 34174 221341 337678* 
Urban Locations covered through BCs (No.) 447 27143 60730 
Basic Saving Basic Deposit A/c through BCs (No. in Rs. 
millions) 
13.27 81.27 116.93 
Basic Saving Basic Deposit A/c through BCs (Amount in 
millions) 
10690 18220 38950 
ICT A/c – BC Transactions (No. in millions) (During the 
year) 
26.52 250.46 328.57 
ICT A/c – BC Transactions (Amount in Rs. millions) 
(During the year) 
6920 233880 524370 
*figure indicate total banking outlets in villages in branchless mode out of which BC outlets 
constitute approx. 95%
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Corporate BC Framework
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
Standalone BC Framework
ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline 
Taking Rural India >> Forward 
BC Model – Who does what

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DIA 1_04 agentes bancarios nabard_india

  • 1. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward BC Model: An effective way to reach financially excluded Presentation by – National Bank for Agriculture and Rural Development, India
  • 2. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Need Extending outreach of the banking sector and Ensuring greater financial inclusion by addressing –  Supply side constraints such as Banker’s concern about low recovery and high transaction, coverage, limited staff, mobility and infrastructure;  Demand side issues such as Lack of awareness; High transaction costs at the client level due to expenses such as travel costs, wage losses, incidental expenses, opportunity cost; Documentation issues; Non-availability of customized products to suit the requirements  The need for comprehensive financial services encompassing savings, credit, remittance, insurance and pension products which the formal financial system has not been able to provide effectively in the rural areas.
  • 3. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward India’s Challenges for outreach Population No. of Villages % of Total Villages % of Total Population Less than 200 1,14,267 17.9 1.24 200 – 499 1,55,123 24.3 5.92 500 – 999 1,59,400 25.0 14.18 1,000 – 1,999 1,25,758 19.7 24.69 2,000 – 4,999 69,135 10.8 32.22 5,000 – 9,999 11,618 1.8 13.22 10,000 and above 3,064 0.5 8.53 Total 6,383,65 100 100 Source : Census of India 2001
  • 4. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Genesis of the BC model Khan Committee in 2005 recommended the use of BCs and BFs as intermediaries for accelerating the process of linking the large numbers of hitherto unbanked persons with the banking network and considered it a viable policy option  Indian Union Budget 2005-06 for the first time referred to “banking correspondents” as intermediaries to provide transactions on behalf of the banks  Dr C Rangarajan Committee on Financial Inclusion in 2008 advocated the use of Business Facilitator/Business Correspondent (BF/BC) models which riding on appropriate technology can extend the outreach of banking sector to financially excluded
  • 5. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Scope of Activities/Services to be provided by BCs  To provide all non-financial support / facilitation services of Business Facilitator such as -  Creating awareness about savings & other products & education & advice on managing money & debt counseling;  Identification of borrowers & fitment of activities;  Collection & preliminary processing of loan applications and submission of applications to banks;  Processing & post-sanction monitoring and Follow-up for recovery  To provide Financial Services as "PassThrough" Agents such as -  Disbursal of small credit, Collection of small deposits & Recovery of principal / collection of interest  Sale of micro insurance/mutual fund products/pension products  Receipt & delivery of small remittances / other payment instruments
  • 6. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Eligible individual/entities as BC or Who can be the Business Correspondent?  Post Offices; NGOs/ MFIs set up under Societies/ Trust Acts  Cooperative Societies  Companies registered under Indian Companies Act, 1956  Retired bank employees, ex-servicemen and retired govt. employees  Individual Public Call Office (PCO) operators, agents of small savings schemes of Government of India / Insurance Companies  Individuals who own petrol pumps /shops / medical / fair price shop owners  Authorised functionaries of well run Self Help Groups (SHGs) linked to Banks  Any other individual including those operating Common Service Centres  Non Banking Finance Companies
  • 7. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward BC Model Every BC attached to a branch – designated as base branch under the oversight of a specific bank branch  To ensure adequate supervision over operations and activities of BCs  Distance between place of business of a BC and base branch is defined by regulator  To ensure that area covered is strictly within their eligible area of operation while engaging BCs BCs to conduct banking business at places other than bank premises Banks must have a Board approved Policy on BC Model adopted Arrangements for Risk Management to be in place
  • 8. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward BC Model Contd… KYC Norms – Banks may use the services of BC for preliminary work relating to account opening formalities Payment of commission/fee – The banks may pay reasonable commission/fee to the BC but the BCs cannot charge any fee to the customers directly The banks (and not BCs) are permitted to collect reasonable service charges from customers in a transparent manner.
  • 9. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Bank’s CBS Server contains account details of customer Corporat e BC Technical Service Provider (TSP) FI Server of corporate BC hosted by TSP & contains identification details of customer like biometric details Customer Bank When banks engage individuals as BCs, then the banks hire their own TSPs BC Model Contd…
  • 10. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Progress and Penetration Branchless banking outlets further went up to 337678 (out of which approx. 95% are BC outlets) by March 2014 from 227617 in March 2013
  • 11. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Progress and Penetration Contd… - 10,000 15,000 20,000 34,174 80,802 141,136 221,341 337,678 0 50000 100000 150000 200000 250000 300000 350000 400000 2006 2007 2008 2009 2010 2011 2012 2013 2014 Progress in establishing CSPs (Customer Service Points)
  • 12. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward CSP Technology used 53% 26% 18% 3% 57% 22% 18% 3% 0% 10% 20% 30% 40% 50% 60% POS+Card Personal Computer Mobile Phone None 2012 2013 BC Model Contd…
  • 13. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Progress and Penetration Contd… Number of Account holders increased to 116.93 million by March 2014 from 81.27 million in March 2013 Similarly, the deposits doubled to USD 650 Million by March 2014 from USD 303 million in March 2013 Progress and Penetration
  • 14. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward BC : Changing Lives at grass roots (Success Stories)
  • 15. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Shahji Tukaram Patil (Seated, Right) says the nearest bank is miles from his village Dagdu Kisan Sutar (another BC) says that his becoming a business correspondent in Mahavade village makes sense as the village (that stands between thatched huts and traditional village houses with colourful motifs) lies about 10 km from the nearest bank. Banking outreach extended to last mile
  • 16. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Petty transactions made possible for needy one  Zohair Mustaq Qureshi (BC) says many of his customers are students who work part time and save a rupee a day  Ramkishore Yadav (BC) from Madhya Pradesh's Hoshangabad district says most of the people who come to him as customers are labourers looking to withdraw money. Only one in four people deposit money, mostly small amounts between Rs100 to Rs200.  Malubai Maruti Takde (Customer), a 55-year-old grandmother in a Maharashtra village, as a routine either deposits or withdraws a little cash from Patil for a saree, a gift for her grandchildren or just to go to the local fair.
  • 17. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Making life easier for ultimate beneficiary  In Fauladpur village, Shanthosh has managed to save Rs 100 this week and is excited to know that her balance has reached Rs 759. Though the Financial inclusion server with her BC Rakesh Sharma is slow and the machine struggles to recognise the fingerprints of a few ladies at times but Shanthosh is happy she doesn't have to go to the local zamindaar. "Oon zamindari ke kaam se ye manne bhala laage. Zamindaar bhi paisa dena taal jaayo par Rakesh ko to kabhi bula liyo". (I like this mode of saving money more than lending or depositing with the zamindaar who used to refuse to pay money at times, but we can call Rakesh anytime we need money).  For Pappi, another local of Fauladpur village, it is the convenience. "Maare ko door jaana na jachchce" (I don't like to travel far to visit a branch).
  • 18. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward BC Leading to financial literacy: distant dream come true  40-year-old Ramkishore Yadav (BC) from Madhya Pradesh's Hoshangabad district, was asked – “Do your clients understand deposits and withdrawals, or tenors and interests?” Yadav says they were mystified initially, but understood the concepts quickly. People quickly learnt and started using cards to deposit or withdraw cash.  Another business correspondent, Malkhan Singh of Madhya Pradesh's Panna district, says “it takes at least a year to convince customers about the benefits of banking”. Malkhan Singh, who comes from a family of farmers, says he visit gram sabhas in every one of Panna's 20 villages and explain the virtues of banking to villagers. These are among thousands of Business Correspondents, who are taking banking to the doorstep of people in far-flung villages across the country & helping mostly illiterate Indian villagers understand the basics of banking.
  • 19. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Working as BC : boosting confidence leading to empowerment Dipali Patil (left), banking correspondent in a Maharashtra village, speaks little English and lives in a traditional house close to a field, far from the hi-tech world of India's cities. But she handles the gizmos in her hand with unusual flair. "Bluetooth se connect hota hai (They are connected through Bluetooth)," she says, with the air of a professional. Her tech-savvy manner and professionalism may seem incongruous, but they are not that unusual.
  • 20. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Working as BC : boosting confidence leading to empowerment She adds that the gadgets have helped change her life in many ways: they have given her more confidence and taken her out to meet a lot more people. Similarly Archana Yuvraj Rohile (another BC) says proudly "People call me madam in the village, because I tell them what to do.
  • 21. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Working as BC is not the only but an additional source of revenue for many  Patil, who works for Ratnakar Bank, says remuneration is not much. For every transaction, he gets a rupee as commission;  Similarly, the bank pays Rs 5 to Nandini Devi (another BC); an extra Rs 9 for every transaction of Rs 120; and for every amount over it, they get 50 paise extra. These are small amounts, but even Rs 500 earned in a village goes a long way for a BC given the fact that they can carry BC business without hampering with their traditional business  Take Dagdu Kisan Sutar, a 28-year-old carpenter from Mahavade village, for instance - Enthusiastically he says “I have about 70 customers whom I help when I am not bent over my carpentry tools in my workshop near my house
  • 22. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward  Similarly, Archana Yuvraj Rohile (another BC) was not deterred by the small size of the transactions.  She used to work in Kolhapur, but did not get enough time with her husband and two children.  Returned to the village where she now does household work and tends to livestock until late afternoon when her husband leaves for work at a spinning mill. That's when she finds time to start her job as a village banker. She says “The government has appointed us for our benefit, that's why I do it.“ CSP with other source of income Working as BC is not the only but an additional source of revenue for many
  • 23. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward BC Model : Make sense for bankers to opt for Given the fact that reaching the remote places is a mandate (Banks need to meet priority sector lending targets as well) and not an option –  Much better alternative than opening a branch –  Normally a rural bank branch can serve 3,000 to 4,000 families in 12 to 15 villages within a radius of 15kms  A Bank branch may require more than 5 years to breakeven in unbanked areas in India The BC option potentially enables banks to reach out much faster and at a much lower cost.
  • 24. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward BC Model : Make sense for bankers to opt for  Better quality of assets - Target clients are well known to the BC / CSP and enhances quality of assets  Corporate-Bank Synergy: Can enhance Brand equity, credibility & Business of the bank –  People recognize HUL for its strong distribution network taking its product to the remotest possible place in India which has given it unbeatable advantage over its competitors  Maruti India boast of having a service outlet at far off places. Similar is the case for Indian Postal Service Department as well as SBI brick & mortar branches.  Recently a mobile giant have made its network availability at the remotest possible place as its USP So having presence through BCs at the last mile can definitely enhance the brand equity as well as business of the bank. Serving far flung areas also has a social responsibility angle which enhance the trustworthiness, credibility and hence the business of the bank in long run.
  • 25. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward BC Model : Bank perspective  Jayanta K. Sinha, Chief general manager (rural business) at SBI, concedes: "You cannot achieve what you could not in 200 years of branch banking in just six years with BCs. Give it some time.“  Manish Khera, CEO of the Mumbai-based BC outfit, Financial Inclusion Network and Operations (Fino), grants you the point, “How many no-frill accounts did banks open in the first 60 years of Independence? Look at the figures now. Would they have achieved these numbers without us BCs? And it has been achieved without violating KYC norms." But also has reservations that if income from pure BC play were to reduce, it will prove difficult for them to stay invested.  "It provides last mile connectivity. But it has increased the cost of delivery and the bank is yet to see any meaningful returns on this investment, however, the increased footfalls at BC locations, an increase in their regular retailing business has been noticed, " says Ratnakar Bank's Head Gandhi. He is fine if retailers and FMCG companies were to piggy-back on BCs.
  • 26. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Challenges/Constraints BC Viability issue- The existing regulations do not allow sufficient flexibility for the BC arrangement to be viable. Due to High cost-low margin model. BCs are not able to meet their costs and are often losing money in the initial years. Majority of the no-frills accounts opened under this model are not operational affecting viability of model. Low remuneration to people working as BCs
  • 27. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Challenges/Constraints Contd.. Lack of professional orientation in BC staff leading to –  Poor maintenance of records  Delay the processing of loans, which subsequently generates a low volume of business for banks Lack of proper financial education of the clientele  A big barrier to the effective utilization of the banking facility provided to the clients through this model Computer based technology is an issue because of lack of standard-training and maintenance. Network connectivity issues particularly in hilly and remote areas
  • 28. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Way Ahead Addressing Viability Issue –  Scale: Scale and Scale is the essence for sustainability.  Providing Range of services: Through a right mix of diversified products  Viability Gap Funding – Particularly in the initial years  3Ps: Patience, Perseverance and Passion of the team The banks need to invest in creating awareness & financial literacy SHGs should be roped in as BC The technology and infrastructure should be robust and cost effective. BCs need to be sufficiently compensated Addressing network connectivity concern at the earliest
  • 29. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Conclusion  Financial inclusion business with the poor is different from selling usual airtime or small sachet of shampoos or noodles in rural areas. It has a long term horizon and pivots for success are trust of end customers and investors’ belief in the business model.  Bankers need to come out of myopia by looking at the bigger picture because It makes business sense for banks to invest in this model looking at the advantages in terms of increased brand equity, trust, credibility, asset quality ultimately impacting its top and bottom line positively in longer run. Given the right impetus by the banks and other financial institutions, the BC banking channel has the great potential to ensure the process of financial inclusion and bring the rural unbanked population within the banking fold
  • 30. THANK YOU ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward
  • 31. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward CSP with other source of income Success Stories (BC : Changing Lives at grass roots) 47 46 33 50 71 37 43 77 40 51 19 89 44 61 100 19 0 20 40 60 80 100 120 All Uttar Pradesh Rajasthan Maharashtra Gujarat Bihar West Bengal Assam Tripura Andhra Pradesh Tamil Nadu Delhi Orissa Madhya Pradesh Meghalaya Karnataka CSPs with other business - state wise (%)
  • 32. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Progress and PenetrationProgress and Penetration Contd… Particulars Mar 2010 Mar 2013 Mar 2014 BC Outlets in Villages (No.) 34174 221341 337678* Urban Locations covered through BCs (No.) 447 27143 60730 Basic Saving Basic Deposit A/c through BCs (No. in Rs. millions) 13.27 81.27 116.93 Basic Saving Basic Deposit A/c through BCs (Amount in millions) 10690 18220 38950 ICT A/c – BC Transactions (No. in millions) (During the year) 26.52 250.46 328.57 ICT A/c – BC Transactions (Amount in Rs. millions) (During the year) 6920 233880 524370 *figure indicate total banking outlets in villages in branchless mode out of which BC outlets constitute approx. 95%
  • 33. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Corporate BC Framework
  • 34. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward Standalone BC Framework
  • 35. ग ाँव बढ़े तो देश बढ़े www.nabard.org /nabardonline Taking Rural India >> Forward BC Model – Who does what