Financial inclusion-allowing easier access to formal banking services to poor people-has been an important priority for the Reserve Bank of India for many years. As always, implementation has proved more difficult than the lofty ideal. Part of the solution to more effectively serve low-income households, particularly in rural areas, is a network of bank agents or business correspondents (BC).
The RBI has also recently eased restrictions for mobile network operators (MNOs) and other for-profit companies to allow them more direct involvement in the BC model and mobile money initiatives. Business correspondents have solved certain problems for banks and have helped to extend financial inclusion. They have problems of their own, however, including motivation, commitment, liquidity management and building trust among their clientele.
In an effort to better understand the customers' needs and their criteria for the optimal BC model, MicroSave conducted research study in the Indian states of Uttar Pradesh and Gujarat in 2010-2011. This study explores following questions:
Where and how do low-income households want to make deposits, withdrawals, payments and other financial transactions? What works best for them, what does not work, and why?
What other issues are important to inspire trust and feel their money is safe with a BC?
From the BCs' point of view, what is realistic? How can their numerous current difficulties serving a diverse and widespread clientele be improved?
Should BC banking services be expanded to include airtime recharge shops, pharmacies, grocery and their extensive networks? How do customers feel about the suitability of such venues and overall trustworthiness of such agents?