The major factor which has propelled the growth of the business correspondent industry in India is the financial inclusion mandate set by the Reserve Bank of India for banks to extend banking services to the unbanked population in the country. Banks in India are therefore increasingly focusing on expanding their geographic coverage and providing customers multiple product offerings through business correspondents. The no frills accounts offered by BCNMs are utilized majorly for G2P payments while the remittance services are used by the out-migrant population. The RBIs approval for interoperability is also expected to consolidate the BCNM model in near future as it will help them widen their product portfolio by offering different products and services to their customers from different partner banks as well as in diversifying the risk. The various entities which are playing the role of a business correspondent include Sections 25s, NGOs, MFIs, retailers, village grocers and others. However, the business correspondents also face challenges such as large number of dormant savings account and low commissions from banks. Despite of this, BCNMs have emerged as a strong channel for domestic money transfer or remittances in India in recent years. The contribution of the BCNMs in the total remittances through banks in India increased from just 4.0% in FY’2008 to around 30.0% in FY’2013.
“The mandate released by the RBI in January 2006 for engaging the business correspondents (BCs) by the banks to achieve greater financial inclusion in the country and to provide limited banking services at low cost to the unbanked population has majorly driven the growth of the BCNM market in India.” – According to the research report ‘India Domestic Remittance, M-Wallet and Bill Payment Market Future Outlook to 2018 – Driven by Government Support and Rising Banked Population’ by Ken Research.
The regulatory support for the sector has gradually enhanced and is expected to increase further in the coming years. The various governmental organizations such as the National Payment Corporation of India (NPCI) and Unique Identification Authority of India (UIADI) are expected to be important enablers of this sector in the coming years.
The report provides detailed overview on the domestic remittances market in the India and helps reader to identify the ongoing trends in the key segments of the industry and anticipated growth in future depending upon changing industry dynamics in coming years. The report will aid industry consultants, business correspondents, banks, microfinance institutions, NGOs and other stakeholders to align their market centric strategies according to ongoing and expected trends in future.