Banking channel for financial inclusion feels left out as scrutiny rises

Business correspondent firms' revenues are under stress as banks get tough with them to meet targets

Nearly two decades after business correspondent (BC) firms came into being to bolster financial inclusion, the channel may be ripe for a rehaul. The flashpoint is the penalties imposed on them by banks, and the revenue-sharing structure.

Since its inception, there has been no concept of penalty in the BC-bank arrangement. It was a low-cost approach that thrived on the meagre commissions earned by ‘Bank Mitras’ (agents deployed by BCs on the field) on the basis of the transactions put through by them. Subsequently, while a penalty clause was incorporated, it was never acted upon. This was because of the channel’s