Quality vs Quantity in the Indian Business Correspondent Network

This post is written by Meenu Mynam, Project Coordinator in Hyderabad for Shore International India.

Photo Credit: Darren Kaltved

Photo Credit: Darren Kaltved

Coming from a technology background and having spent time writing advanced code, my first visit to a remote, yet well maintained village near Suryapet in Andhra Pradesh (a southern state in India) was nothing short of a surprise. Having read about business correspondent (BC) model, seeing one in action provided good learning. However, numerous issues surrounding the BC model makes one wonder if the percentage of banked population in India, as claimed by the Reserve Bank of India (RBI) and various other banks, is actually able to use the services and transact as intended.

The first BC we met was helping an old, illiterate woman transact.  It was good to see an uneducated woman walk into the BC agent outlet, authenticate her identity, withdraw her money, and leave. She had never been to a bank and was extremely happy that the BC was providing her an opportunity to save and withdraw money whenever needed. On further interaction with the agent, we understood that there were close to 250 people who had enrolled with the agent, of which only 50-60 could transact. This problem seemed to be common with a number of agents we met, which hindered them from providing services to many customers.

In 2006, RBI, the central bank in India, permitted banks to use agents to facilitate transactions in rural India as part of its financial inclusion mandate. With 70% of the Indian population living in rural areas, many BC companies tried to set up agent networks covering most of these regions, but a large number of these agents are yet to be transaction enabled. There are also transaction enabled agents who have invested in equipment and are awaiting the activation of their customers’ accounts. The time lag is very high in some cases, impacting the motivation levels of the agent, who is usually drawn towards the BC model hoping to make some extra money and achieve the elevated status it offers in their community. Continue reading


Mobile banking and microfinance: Lessons from Pakistan

This post is written by Afsheen Shakoor, SBI-Pakistan Resident Advisor for an MFI branchless banking project. This post also appears on SBI’s blog.

Photo credit: ASASAH

Photo credit: ASASAH


It’s one of the greatest requests and laments of Pakistan’s microfinance clients. In surveys and informal interviews, clients say they want closer offices and quicker meetings. In this environment, little wonder that microfinance institutions (MFIs) are experimenting with mobile banking. But is mobile banking really the answer to clients’ prayers?

Well, maybe.

With mobile banking, instead of going to a branch office to make repayments, clients pay through designated agents of the partner bank or MFI. These agents may be local shopkeepers, pharmacists, or mobile retailers, and are ideally closer to the client than the MFI branch.

But in the case of Pakistan, agents haven’t been closer to the clients. Instead, they’ve clustered near the MFI and bank branches. So the gains in terms of speed and convenience have been modest, averaging as little as ten rupees. Continue reading

The next phase of developing agent networks in Pakistan

This post is written by Khurram Sikander, Senior Lead, SBI ADC Implementation Group & Gerald Rasugu, Global Lead, SBI Agent Network Group.  Khurram is based in Karachi, Pakistan and Washington, DC, USA, and Gerald is based in Nairobi, Kenya.

Photo credit: State Bank of Pakistan

SBI, at the behest of the State Bank of Pakistan (SBP), hosted a branchless banking workshop focusing on agent network development last quarter. The workshop attracted key stakeholders from the branchless banking industry, including financial institutions, technology and telecom companies. Several points were covered regarding the success of branchless banking and its dependence upon the quality of banking agents in the market. Among the opportunities identified as imperative critical factors pertaining to branchless banking is the strength of its agent network. A well-developed banking agent network is undoubtedly the most efficient way of penetrating the un(der) banked segments of the population.

The main purpose of the conference was to understand the nature of challenges encountered when institutions deploy branchless banking initiatives and identify opportunities as branchless banking initiatives evolve beyond the implementation stage. Continue reading

Agent economics: profit-per-transaction-minute

This post is written by Debbie Watkins, bKash Resident Advisor in Dhaka, Bangladesh.

One part of the Alternative Delivery Channel (ADC) financial modelling equation is paying commission to agents.  When considering the share of revenue to give to agents, don’t just think about the amount they receive, but how much of their precious time they have to dedicate in order to get it. I call this the profit-per-transaction minute (PPTM) ratio, and it’s calculated in much the same way as the dollar-per-wear equation I use to justify buying a really expensive pair of shoes (but enough about that).

Here’s roughly how it works. In order to motivate an agent, they need to be offered a good ROI (return on investment), and a good ROT (return on time) – as this is how their existing business works. A small shopkeeper needs to do two things at a basic level in order to make profit: invest in stock, and invest in the time required to sell that stock. So, let’s say he’s an orange seller:

  • He buys 100 kg of oranges for $50 = $0.50 per kg (comprising roughly 10 oranges)
  • He sells them for $0.60 per kg = $0.10 markup per kg (or 20%)
  • The average transaction (weighing the oranges, putting them in a bag, taking the money) takes 1 minute
  • The average weight he sells per transaction is 2 kg
  • Therefore his PPTM is $0.20

This equation changes drastically if the markup remains the same but his average sale is only a single orange – the PPTM goes right down to $0.01 (so it takes him 20 times as long to sell the same amount and make the same profit as before).

This can be one way to guide that “how do I select agents?” discussion. Here’s an example, comparing a cash-in transaction to our orange seller’s PPTM. Continue reading