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Bringing Agent Banking to Rural Women’s Self-Help Groups in India

How a new technical solution called Dual Authentication is benefiting informal collectives and agent networks
Two women signing on a journal with their thumb, India.

It is estimated that India has over 8.3 million women-led Self-Help Group bank accounts, which serve a membership base of over 90 million women. There are also thousands of similar informal collectives, such as Village Organizations and Farmer Interest Groups. For these informal groups, performing the banking transactions needed for their regular operations has long been an inconvenience, requiring traveling long distances to the nearest bank branch and leading many groups to deal mostly in cash, outside the banking system.

While the spread of agent networks throughout rural India has helped bring banking to many people’s doorsteps, this type of service was still inaccessible for informal groups and similar collectives.  Agent banking applications were designed only for individual customers and could not handle group or joint accounts operated by two or more authorized signatories.

Enter Dual Authentication, a solution for informal groups with joint accounts

Fortunately, the development of Dual Authentication (DA) has now provided a solution for this issue, allowing joint accounts with multiple signatories to perform banking transactions through bank-appointed agents, using biometric authentication devices. The DA solution is based on the AEPS (Aadhar Enabled Payment System) platform, which processes bank and Aadhaar (Universal ID) details of the mandated signatory account holders and authenticates the transactions to be securely carried out at banking agent points.

To activate DA in an SHG bank account, two or three SHG signatories undergo a one-time biometric mapping at the bank branch, where they submit know-your-customer (KYC) documents. Cash withdrawals, deposits, transfers, remittances and balance inquiries can then be performed seamlessly by informal collectives at the agent point, providing great relief to these group account holders.

Benefits of Dual Authentication – both for SHGs and agent networks

“Two members from our Self-Help Group (SHG) used to commute to the bank branch once a month to do SHG transactions. Now that we have the Dual Authentication facility activated in our Group accounts at the business correspondent (BC) or agent point, we don’t travel to the bank branch and can do banking in our village, during group meetings with the help of BC Sakhi (female bank agent).” – Susheela Dashrat Patel, Member of Jai Krishna SHG in Madhya Pradesh, India.

SHGs with DA activated in their accounts need not handle cash while performing transactions, as funds can be transferred to a member’s personal bank account, allowing easy withdrawal or transfer through the same banking agent. So, for example, instead of receiving bank loans in cash and then distributing that cash among SHG members, the groups can now transfer the loan amount for each member directly to their personal accounts. These digital transactions help members to create cash flow records, improve balances and activity rates in their respective bank accounts and reduce collectives’ cash management risk. Increased usage of SHG members’ accounts also helps the banks to be able to offer savings services to SHG members, encouraging rural women to save at formal financial institutions.

The SHG members are not the only ones who benefit. The increased number of transactions provides additional income for bank agents. Agent network managers, who support individual agents, can also now earn a commission for DA-based transactions which had not been happening earlier. As Anita Patel, a bank agent in Madhya Pradesh, shared, “For the last six years I have been working as a BC Sakhi. The DA facility in SHG accounts now have enabled me to enhance my monthly transactions and commissions considerably.” She now serves around 400 SHG members, who represent 40 percent of her transactions and 47 percent of the value of the transactions.

Challenges for the DA solution

Despite the numerous benefits of DA for informal collectives, there are a few challenges that have hindered the growth and wider usage of DA, restricting its ability to benefit SHG members at scale, including:

  • Low per-day transaction limits on the number and ticket size of bank account transactions.
  • Lack of awareness of DA at the bank branch level.
  • Lack of interoperability between banks on DA transactions.

Understanding the importance of overcoming these challenges, the National Payments Corporation of India (NPCI), with support from the National Rural Livelihoods Mission (NRLM), recently issued guidelines for Banks to implement interoperable DA facilities which would allow any bank’s group account holder to transact with the agent of any other bank. This option is now under pilot testing with two banks. In addition, CGAP and the World Bank’s rural livelihood team (Agriculture Global Practice) are currently doing research to understand the issues, challenges and opportunities around payment digitization for informal collectives in Madhya Pradesh, Tamil Nadu and Telangana.

If these challenges are mitigated, it could lead to large-scale digitization of payments between informal collectives and their members, potentially improving rural women’s savings, driving digital payments in agricultural value chains  (through farmers' collectives), as well as building a business case for the banking system to serve them.


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Deborah Omotsefe Odejimi , Igbinedion University, Okada, Nigeria, Nigeria
17 December 2023

Quite an insightful write-up. Aside SHGs, most women traders in rural Nigeria have Osusu groups which collect daily contributions from members. The major problem is that these contributions are made and held outside the banking system. If these women can cluster under the SHG, it would be easier to introduce them to Agent Banking.

21 October 2023

Digital awareness is the priority of the moving India . Through SHG we can improve this in mass community.Excellent efforts by all writers.

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