Business Correspondent Network Revamp: NIBM Study and Key Gaps
Why in the news
Indian banks are set to rework their Business Correspondent (BC) network, described as the world’s largest on-ground channel with 2.5 million agents. The overhaul will draw on an NIBM study assessing the services BCs provide. NIBM was set up by the RBI in 1969.
About BCs
- BCs are retail agents of banks working where a full branch is not viable, taking basic services to customers’ doorsteps in rural and remote areas.
- Services: opening BSBD and PMJDY accounts; cash deposits, withdrawals and transfers; Aadhaar seeding and e-KYC; DBT payouts; selling insurance, pension and mutual fund products; loan applications, recovery support and credit counselling.
Regulatory framework
- RBI regulates BC operations under the Financial Inclusion Plan.
- Banks are fully responsible for their BCs, including customer protection and grievance redress.
- BCs must use biometric devices and interoperable platforms linked to Core Banking Systems.
Concerns
- Pay: current fixed and variable models are inadequate. Suggestions: guaranteed minimum commission in tough areas (North-East, hills, villages under 3,000 people), CPI-linked commission, and a ₹5,000 monthly minimum allowance.
- Operations: high attrition; need for certification and training; no complete registry or geo-tagging; weak grievance system; cost-effectiveness under review.
Possible reforms
- Let BCs bundle government payments with insurance and other services.
- Replace periodic physical audits with digital monitoring.
Exam angle
- NIBM founded: 1969 by RBI.
- BC network size: 2.5 million agents.
- Related terms: BSBD, PMJDY, DBT, e-KYC.