With the Reserve Bank of India allowing retired teachers, kirana shop owners and public call office (PCO) operators to be hired as business correspondents, banks are set to hire over 200,000 people over the next few years to push financial inclusion initiatives.
So far, only some banks have finalised the number of correspondents they would hire.
While the country's largest lender, State Bank of India, is expected to hire at least 40,000 persons, Punjab National is looking at an additional 75,000, while Union Bank intends to hire 50,000 business correspondents over the next two to three years.
Canara Bank and Andhra Bank have not finalised the number they would hire. They are seeking an authorisation from their boards to get a wider range of people.
The correspondents would be involved in collecting deposits, helping account holders withdraw cash and also sell other financial products such as life insurance. The biggest use of the hand-held devices used by the business correspondents would be to remit funds from, say, Dharavi in Mumbai, to a village in Dumka in Jharkhand.
But, before they hire, banks are trying to ensure they do not face any hurdles in pushing the initiative, a joint one of the government and the regulator. They are drawing upon their experience with pilot projects in recent years to remove possible glitches.
For instance, some banks that tried out biometric automated teller machines (ATMs) that use fingerprints instead of the four-digit identification number (PIN) realised these machines could not be linked to the existing ones. Besides, the costs were exorbitant and the vendors were refusing to lower it, citing low volumes.
Punjab National Bank is working on 12 pilot projects for using smart cards. Union Bank of India is ready with a biometric card that can deal with deposits, remittances and other products such as insurance plans.
"Once operations take off, we expect to convert opportunities into business. Under 'Namaskar', the bank plans to have 15,000 kiosks in four years. Each unit will have one business correspondent and four representatives," said K R Kamath, chairman and managing director pf PNB. This would mean taking 75,000 persons on board in four years.
"We have two million biometric card users and 3,000 touch points but we need to figure out the processes, oversee the project and devices to scale it up," said Union Bank Chairman and Managing Director M V Nair.
But, bankers also said all the issues have not been sorted. "In rural areas, those who are active are also politically connected persons and banks will have to face a challenge in ensuring the integrity in their working. This is all the more important when they will be empowered to handle cash," said the chairman of a medium-sized public sector bank.
"Also, with the current human resource base in rural branches, banks are already burdened with a lot of work. The expansion for financial inclusion will only add to the strain," he added.
Corporation Bank Chairman and Managing Director J M Garg said it might not be easy finding correspondents on the scale required. For instance, a kirana shop owner who had a lot of footfalls might not be willing to work as a business correspondent. "Only if someone has enough time will he take up this additional work," he said. Even before the new norms came in, the bank had received permission from RBI to hire individuals as correspondents.
At present, the bank has 2,000 such people working to push financial inclusion, with one person assigned to each village. Apart from individual agents, the bank has also tied up with Bharat Petroleum and Tata Tele to provide a thrust to the financial inclusion initiative.
Unlike the others, SBI is trying to piggyback its financial inclusion partners to reach out to the under-banked population in the urban and the rural areas.
With its network of over 15,000 branches, a senior SBI executive said it had tied up with 10 national-level business correspondent organisations, with about 12,000 outlets. There were regional arrangements, too.
"The business model for financial inclusion would depend on aspects like the kind of remuneration and payment arrangement firmed up with the state government for programmes like the National Rural Employment Guarantee scheme. Once the model is finalised, we will increase the BC outlet base by five times, to over 50,000 outlets," he added. Though the executive did not provide the number of people who would be required, he said it could vary from one person to 10.
One area that banks have started paying attention to is the commission or compensation the business correspondents would be entitled. One bank, for instance, is trying incentivise the sale of financial products. "In case they sell insurance policies, then there could be an incentive or a commission that is paid," said a banker.
