i nc lu s i ve f i nanc e i nd i a re port 2014
68
the project would be necessary to ascertain the sustain-
ability of the model. Even under the new model both
the sakhi and the SHG federation are supposed to get
commissions from CSC. However, since in the begin-
ning revenue income for CSCs is low, federations
do not take any commissions in the first year or so.
But this is of course not sustainable. The time frame
and business model for all stakeholders have to be
considered.
The bank will soon introduce RuPay KCC and RuPay
debit cards through the CSP touch points. The bank has
now decided to route the transactions of SHG group and
individual members (deposit, withdrawal, internal lend-
ing, and loan disbursements) through the POS platform
which will increase the frequency of transactions and
help CSPs increase their earnings significantly.
The key learnings from the pilot have been:
•
Community-driven SHG-based networks can be
leveraged to formalize effective BC agent network to
provide doorstep banking services with high degree of
trust and reliability.
•
Banks need to provide diverse range of products and
services through the CSP platform to ensure revenues
and sustainability and viability of CSP.
•
Social respect, economic empowerment, and pride of
being associated with a bank are the socio-economic
benefits of being a CSP agent for a bank.
•
Concerted capacity-building approach coupled with
customized user-friendly training materials and con-
stant hand-holding of SHG members can help them
drive the pilot project themselves.
Notwithstanding the positive expectations about the
model, the fact that bank sakhis are prepared to work for
limited earnings is a cause of concern. In other contexts
as well where SHG women members have taken on the
role of bank mitras in their individual capacity, they may
work for low returns because they feel that they acquire
visibility and receive recognition in society for their work.
This fact has been noted in the current project as well.
This supposed ‘social sustainability’, as against economic
viability, of the CSP is perhaps an unacceptable basis to
assign them the duties and responsibilities of acting as a
BC agent for the banks.
3.7 ROLE OF BCs IN THE NEW FINANCIAL
INCLUSION STRATEGY
As has been noted there have been changes in the con-
ceptualization of the BC relationship with banks over the
past 7–8 years since it was first introduced. While the
list of eligible entities that can act as BCs has increased
in number, the BC model has itself grown additional
layers of sub-agents and intermediaries. Instead of a
bank branch-BC-client relationship the bank’s relation-
ship with the client can now have multiple intermedi-
aries thus: bank-common BC/TSP-BC-CSP-SHG/
individual. There is not enough evidence that adequate
margins exist to maintain the intermediary agents in-
volved in this elaborate delivery structure especially in
low-volume areas and contexts given the level of charges
for various services. Indeed using commissions from
EBTs as a source of revenue renders financial services
delivery hostage to the continuance of these transfers and
payments under various government programmes.
The revival of the credit-led partnership model by
private banks appears by to offer a route to viable delivery
of credit through NGOs and MFIs who can act as an
extension of the banking system. Here the concerns are
the resultant high rates of interest payable by the SHGs
and the substantial risk sharing imposed by the banks on
the partner agencies.
Though SHGs and women SHG members are a large
and organized constituency suitable to be involved in the
banking relationship some of the innovations such as the
SHG Network as BC pilot are yet to show viability and
sustainability. Implementation of the BF functions, how-
ever, has potential to be able to improve CSP viability,
and help cement the CSP-bank relationship.
As far as government thinking is concerned, the MFI
and SHG channels are still not being seriously considered
for large-scale deployment of BCs. The strategy under the
PMJDY is to take forward the Bank Mitr (BC) model
for expansion of banking services by modifying it to
ensure both operational flexibility and viability of the
BC. It is intended that the existing rural infrastructure
of post offices having Gramin Dak Sewaks would be
optimally utilized to become BCs of the Banks. One of
the key strategies will be deployment of the online fixed
point BC to deliver basic banking services near to the
