agent s of f i nanc i a l i nc lu s i on
59
highly profitable.
14
The lack of operational support and
monitoring by banks was a major challenge cited by
agents and CSPs and a lack of marketing and operational
support by banks highlighted by the BC network
managers. Liquidity management was a major barrier,
particularly with G2P payments involving large sums of
cash. A large number of NFAs were still inoperable and
had still not been converted into BSBD accounts. Some
of Microsave’s recommendations were:
•
Rationalize allocation of villages/panchayats to banks.
•
Implement the recommendation of 3.14 per cent
minimum commission per transaction and to man-
date a minimum share for agents in G2P payments.
•
Introduce standards for integration and inter-
operability.
•
Mandate agents to have bank accounts to avoid carry-
ing of cash for long distances.
•
Allow mobile network operators to act as issuers of
e-money with proportionate supervision.
3.4 BANKS AND NGO‐MFIs AS BCs:
RETURN OF THE PARTNERSHIP MODEL
While the BC model is basically associated with banks
offering limited products and services in the form of or
through a no-frills savings account using CSPs directly or
through corporate BCs, some banks have tried different
channels and attempted to provide credit facilities to the
unbanked population.
As noted earlier, in 2006–07, a few banks in collabora-
tion with MFIs introduced ‘Partnership Model’ in which
the MFI played the role similar to that of a BC for bank
lending as envisaged by the RBI, with the assets on the
books of the bank. An example of such a model was the
partnership between ICICI Bank with Cashpor,
15
and
with several other MFIs, with FINO as an enabling tech-
nology provider. However, this model did not succeed
due to issues related to KYC norms and low recoveries
related to the over-extension of the credit facility. This
model has returned with other private banks engaging
B
OX
3.5
Study on Viability of BCs in Regional Rural Banks
23 RRBs were covered based on the number of BC transactions undertaken by them up to 31 December 2013. The study was
conducted in during April–May 2014.
Selected Findings:
• For almost 50 per cent of the CSPs interviewed, BC operations were the main source of income.
• In 60 per cent of the cases, the CSPs were earning in the range of Rs. 1,500 to Rs. 3,000 per month.
• The transaction charges paid to the CSPs were in the range of Re. 1 to Rs. 2 for deposit or withdrawal transactions and Rs. 5 to
Rs. 15 for opening an account.
• All the CSPs were offering opening of savings bank account, deposit and withdrawal transactions.
• However, only one RRB was providing credit products like KCCs through CSPs as also microinsurance.
• Customers of the bank were appreciative of doorstep banking services provided by CSPs. There was a demand for more services
to be offered through CSPs especially credit products.
Issues highlighted by the various stakeholders:
• Limited number of products being offered through CSPs and low per transaction commission provided
• Connectivity issues and Lack of interoperability of systems and devices
• Low per day cash limit of CSPs
• Lack of capacity building of branch managers and training to BCs on banking aspects
• Lack of financial literacy and awareness
It was concluded that the BC channel was viable provided banks were ready to invest in it. The cost of transactions was extremely
low when compared to transactions at branch, ATM, etc.
Source
: NABARD (2014)
