Women Business Correspondents for Financial Inclusion

Context

Recently, The State Bank of India’s economic research department suggests that increasing the number of women business correspondents (BC) by implementing a 33% reservation could significantly impact India’s socio-economic fabric.

What is Financial Inclusion?

1. Financial inclusion refers to the effort to provide access to essential financial services (e.g., banking, credit, insurance,) and products to individuals and communities, especially those traditionally underserved or excluded from the formal banking system. The RBI’s financial inclusion (FI) index shows financial inclusion is improving in India.

Who are Business Correspondents?

1. Business Correspondents (BCs) are intermediaries appointed by banks and financial institutions to provide banking and financial services in areas where establishing traditional branches may be challenging or expensive. BCs act as a link between banks and customers, offering services such as opening accounts, disbursing loans, collecting payments, and facilitating other financial transactions.

• RBI launched the Banking Correspondent’s (BCs) model in 2006 to expand Financial Inclusion. E.g., ‘Bank Sakhi’ (or female banker friend) model.

Current status of BCs (as per the report)

1. BCs operate over 95% of banking outlets in rural regions.
2. Presently Women agents comprise less than 10% of the BC workforce.

Ways in which Women BCs Deepen Financial Inclusion

Ways	Description
Rapport	Women BCs can build a rapport with diverse customer groups, promoting demand-driven incremental revenue while advocating for small savings schemes and social security of ferings.
Grievance Redressal	Women BC agents, with their patience, are more willing to address queries and explain product features, contributing to a transparent and comprehensible financial system.
Encourage Other Females	Female customers are more open to sharing their family’s financial issues and needs with female BC agents, fostering a better under- standing of product offerings. Women customers find women agents easier to approach, trustworthy, and great at maintaining confidentiality.
Performance	Female BC agents demonstrate similar or higher business performance and are more likely to serve customers in remote areas, the elderly, and other underserved sections of the population. Reports show that increasing women’s involvement in Pradhan Mantri MUDRA Yojana improved the financial status of female borrowers.

 

Challenges with Women BCs 

Challenges	Description
Lack of financial inclusion	Many WBCs face difficulties in accessing financial services and credit due to their lower socio-economic status and lack of collateral.
Digital illiteracy	A large number of WBCs lack familiarity with digital technology and the necessary skills to use digital financial services effectively
Minimum Educational Qualification for BCs	Minimum qualification is a hurdle for onboarding female BCs. The current certification requires a 10th pass, but some banks set a higher requirement of a 12th pass
Societal Attitudes	WBCs often encounter societal attitudes that view women as homemakers rather than entrepreneurs, limiting their opportunities for business growth
Lack of Support	WBCs often lack support from government and financial institutions, making it challenging for them to access the resources needed for business growth.
Safety Concerns	Operating in rural areas with a high risk of violence and crime, WBCs face safety concerns that limit their mobility and put them in danger during transactions.

 

Government Initiatives

1. One Gram Panchayat One BC Sakhi: It aims to deploy one BC Sakhi in every Gram Panchayat by 2023-24 (it is an initiative by the Ministry of Rural Development)
2. Pradhan Mantri Jan Dhan Yojana.
3. Digital Identity (Aadhaar).
4. National Centre for Financial Education (NCFE).
5. Centre for Financial Literacy (CFL) Project.

Way Forward

1. The present SBI report asks to set 33% reservation in BCs for women.
2. Reduce entry barriers with equipment, rental support, and initial stipends.
3. Address mobility issues and offer flexible hours.
4. Creating a Supportive Environment
5. Establish women-agent communities
6. Implement financial literacy programs.
7. Offer small loans, micro insurance, and low-balance savings accounts.
8. Address gender-based barriers to financial services.

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