BCFI to push for SRO status; explores solo, strategic partnership options

The Business Correspondent Federation of India (BCFI) is set to apply for self-regulatory organisation (SRO) status. “We have started the process internally. We may either go alone or team up with the Payments Council of India or the Fintech Convergence Council,” a source confirmed.

 

While there is no official category for non-banking financial company: business correspondent (NBFC: BC), these entities play a critical role in the financial inclusion landscape by facilitating last-mile credit delivery. 

The growing emphasis on financial inclusion has deepened the interaction between BCs and the broader financial system, highlighting the need for better governance standards, higher investments, and sustainable business models. This underscores the importance of a BC-SRO.

  BCs have of late been sounding off to the Ministry of Finance, warning that the channel is becoming increasingly unviable.

Signs that the model is ripe for an overhaul emerged last year when the BCFI and Grameen Foundation India advocated for “concrete capacity building”.

  Another industry body, the Business Correspondent Resource Council (BCRC), proposed the creation of an India Business Correspondent Equity Fund — similar to the India Microfinance Equity Fund — to the Department of Financial Services. Both proposals draw from the recommendations of the January 2008 report by the C Rangarajan Committee on Financial Inclusion, which suggested providing funds to specialised institutions offering capacity-building support to BCs.

  A pressing issue for BCs is the growing number of cases where law enforcement agencies have frozen their accounts due to misuse by cybercriminals.

  Last month, the BCRC raised several concerns during a meeting with the Minister of State for Finance Pankaj Chaudhary. Chief among these was the stagnant commission rates for corporate BCs and bank mitras, which have not been revised in 12 years. This stagnation has severely impacted bank mitras, particularly in rural and semi-urban regions, leading to high attrition and loss of livelihood.

  Commission rates set more than a decade ago have not been adjusted for inflation or rising operational costs, decreasing the channel’s profitability. An increase in commission rates was emphasised as a step towards stabilising the livelihoods of bank mitras and directly improving financial inclusion.

  Meanwhile, many field agents are leaving the BC channel, lured by better opportunities with e-commerce companies such as Amazon, Flipkart, and Blinkit. 

BCs also face challenges due to their heavy reliance on cash-in, cash-out — industry jargon for cash deposits and withdrawals — and limited training in value-added services. This limits their ability to cross-sell or hawk other services.

 

 To address these issues, stakeholders are calling for intensified capacity-building efforts, better training for field staff, and the development of a larger pool of skilled trainers.

 

BCFI’s path to self-regulation

 

- NBFC:BCs play a critical role in the financial inclusion landscape by facilitating last-mile credit delivery

  - No firms are officially categorised as non-banking financial company: business correspondent (NBFC: BC), but they intersect with the wider financial world

  - The industry is concerned about the low and stagnant commission rates for BCs

  - Field agents are not staying in the BC channel; many are being wooed by e-commerce firms