Business correspondents seek financial support, insurance cover

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SME Times News Bureau | 05 Jun, 2020
The Business Correspondents Federation of India has sought financial support from the Centre amid the COVID-19 crisis.

During a recent webinar, it has demanded Rs 5,000 per month per business correspondent from the Central government with effect from April 2020, along with health and life insurance cover for their uninterrupted services during the inconvenient times and most uncertain times for the next six months.

"The appeal is being made to banks as well to keep the business correspondents channel afloat with liquidity support to Corporate Business Correspondents who facilitate credit to low income communities through a large field force much like microfinance institutions," said a statement from the industry body.

The virtual roundtable on Thursday to discuss the contribution of the business correspondents during the lockdown and the role played in providing cash to the rural regions was attended by Sub-K, FIA Global, Nearby, Fino Payment Banks, Oxigen, and SaGgraha.

Business correspondents are playing a crucial role in financial inclusion, helping customers, especially in rural areas, where banking services are limited, as per the industry body.

The sector leaders predict a return of remittance after a much higher decline rate during March to mid-May.

Major players have either started witnessing a rising curve or are expecting a rise in the transactions. Digital transactions are on the rise as witnessed in May 2020 and AEPS as well as UPI transactions are expected to lead the way, said the statement.

The network of business correspondents can be leveraged to source MSME loans which act as a fuel in recharging the economy, it said, adding that it is a crucial juncture for the government and other stakeholders to view correspondents' networks favourably.

Talking about the current situation Sasidhar Thumuluri, Chairman, BCFI said: "During COVID-19 lockdown more than 80 per cent agents have worked tirelessly to meet the demand for money, especially enabling the withdrawal of DBTs (direct benefit transfer) released by the government as a part of PMGKY (Prime Minister Garib Kalyan Yojana) and other schemes.

With the gradual opening up of the economy, the role of business correspondents will become even more important as cash starts flowing into the system, loans start getting repaid and new loans disbursed, said Thumuluri, who is also the MD & CEO of Sub-K IMPACT Solutions.

Seema Prem, CEO, FIA Global, said: "The effort and cost of servicing a customer has gone up significantly without a corresponding increase in a Bank Mitra's income. The BCFI requests the government to consider a fixed remuneration of Rs 5,000 per Bank Mitra for the next six months so that the Bank Mitras continue to remain viable and are able to provide uninterrupted service to PMJDY customers."