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The State of Business Correspondence: Agent Networks in India

How can India overcome the problems that hamper the growth of the Business Correspondent model?
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MicroSave’'s Policy Brief 2 presents findings from a Rapid Agent Assessment (RAA) to help stakeholders understand the problems of the Business Correspondent (BC) model in India and find solutions to them. MicroSave conducted 13 RAA studies in which it interviewed 560 individuals, including agents and their customers, network managers, and bank staff, from August 2011 to February 2012, in 29 districts covering urban, semi-urban, and rural areas. Each RAA took three to five days with four to six staff members on-site. They looked into areas such as commission structure and pricing, cash management and e-float, capital and operating costs, organizational structures, product features, processes and coordination, and technology. Findings indicate that:

  • Very few agents make profit;
  • There is a large difference in the income of urban and rural agents;
  • There are more options for enterprising agents;
  • Technology and commissions remain problematic.
  • Agent churn and disenchantment is common after the first few months.

The Brief highlights the importance of agents in achieving financial inclusion. It makes recommendations in the areas of standardization, training, marketing and advertising, and coordination with the agents.