Rahul Sharma, Chief Financial Officer & Executive Director, BLS E-Services
India has over 2.5 million Business Correspondent (BC) agents extending banking services to its remotest corners, yet the industry often treats them as a distribution cost rather than an economic asset. That framing needs to change. Tasked with bringing formal banking services to underserved areas, these agents have become the primary point of contact for millions of unbanked and underbanked citizens in rural and remote regions. By helping address gaps in geography, infrastructure and trust, the BC framework has become an integral part of India’s approach to inclusive economic growth.
Looking ahead, there is an opportunity to reconsider how the BC industry is viewed. Seeing it primarily as a social responsibility initiative does not fully reflect its economic significance or long-term potential. Supporting BC agent welfare is not merely social responsibility—it is an investment in last-mile economic infrastructure with measurable returns.
A key feature of the BC model is its structure. By allowing banks to partner with local individuals and entities, the system helps manage the costs associated with operating traditional bank branches in areas with low population density or lower incomes. Formalised under the Reserve Bank of India’s (RBI) guidance, this model has become a major channel for delivering government schemes, from the Pradhan Mantri Jan Dhan Yojana (PMJDY) to cash relief during the COVID-19 pandemic.
The BC channel has played a significant role in expanding India’s financial inclusion programmes. Under PMJDY, total accounts reached 578 million as of February 2025, according to government data. More than 55% of Jan Dhan accounts are held by women, while nearly 78% are located in rural and semi-urban areas, highlighting the extensive reach of the scheme launched in 2014.
Financial inclusion efforts have extended well beyond basic banking. Enrolments under the Pradhan Mantri Jeevan Jyoti Bima Yojana have reached 268.8 million, while 571.1 million individuals are covered under the Pradhan Mantri Suraksha Bima Yojana. The Atal Pension Yojana has also recorded more than 88.4 million subscribers.
These agents are often members of the very communities they serve, and this local connection is central to the model’s success. For rural customers who may find traditional banking environments unfamiliar, interacting with a local agent helps reduce hesitation. This familiarity lowers a key psychological barrier to financial inclusion. Field experience consistently shows that rural customers often hesitate to enter formal banking systems because unfamiliar procedures, language barriers and the perception that their savings are “too small” discourage them. A BC agent, as a trusted neighbour who speaks the local language, can build the confidence needed to bring them into the formal financial system.
A strong BC network can deliver benefits beyond opening savings accounts. The provision of micro-credit through these agents has supported rural entrepreneurship, enabling customers to start or expand small businesses. This creates a multiplier effect: the BC channel provides livelihoods for its agents while simultaneously contributing to economic activity among customers, strengthening the overall economic standing of local communities.
The industry is also adapting to India’s digital transformation. With rising smartphone penetration and wider internet access, BC agents are increasingly shifting from paper-based processes to digital enrolments using Aadhaar-enabled Payment System (AePS) and e-KYC technologies. This transition has improved efficiency, reduced costs and strengthened the long-term sustainability of the model. Many agents have also shown a preference for digital training modules over conventional methods.
Despite these contributions, the BC industry continues to face systemic challenges that limit its full potential.
First, there is a lack of structured and continuous capacity building. A significant proportion of agents—nearly half—currently offer only one or two services, primarily Cash-In Cash-Out (CICO) transactions. While these services remain in high demand, they represent only a fraction of the broader range of financial products that agents could potentially provide.
Second, the industry faces challenges related to centralised monitoring and data analytics. Much of the data generated by the BC network remains unstructured, representing a missed opportunity to generate insights, inform policy and identify training gaps. The absence of a shared fraud and risk management database also creates vulnerabilities. A BC agent removed for fraud by one corporate BC network may potentially join another without their previous record being known, leading to financial losses and undermining trust in the system.
To address these challenges, the RBI introduced the National Strategy for Financial Inclusion 2025–30 (Financial Inclusion 2.0). The strategy emphasises structured financial training in areas such as insurance, recurring deposits and pension schemes, where many agents currently lack the confidence to offer these products. It also highlights the need to make the BC model more economically viable by expanding the product portfolio and enabling agents to generate income from a wider range of services, including non-CICO products such as mutual funds.
To build a more inclusive financial system, greater focus is needed on strengthening the operational framework with BC agents at its core. Making the BC ecosystem more attractive for investment should be viewed as investing in last-mile economic infrastructure. This includes funding scalable training programmes that help agents evolve from transactional service providers into trusted financial advisors. It also requires stronger systems for fraud monitoring, consumer protection and maintaining the integrity of the BC channel. Leveraging technology and data analytics to support policy formulation, improve operational efficiency and prevent fraud will further strengthen the ecosystem.
In Financial Inclusion 1.0, BC agents served a functional role in extending banking services across India. They have helped build trust, support rural entrepreneurship and expand access to formal finance. As India moves towards Financial Inclusion 2.0, investing in their welfare, skills and security should be recognised not merely as a social responsibility initiative but as a sound economic strategy that supports sustainable and inclusive growth.