The provision of banking services is very vital for the long-term sustainable development of any country. In India, it has been a constant endeavor of the regulators and the policymakers to achieve financial inclusion with the objective extending financial services to the large hitherto un-served population of the country to unlock its growth potential. Our policy makers have been more keen on achieving inclusive growth by making financial services available to the masses (mainly the last mile).

RBI made a policy announcement on Financial Inclusion by Extension of Banking Services in January, 2006, allowing banking services through agents, known as Business Facilitators and Business Correspondents (BC). This was expected to accelerate the journey towards financial inclusion through digital channels to hitherto excluded segments. In September 2013, Reserve Bank of India (RBI)also set up the Committee on Comprehensive Financial Services for Small Businesses and Low Income Households, chaired by Dr. Nachiket Mor, with a task of framing a clear and detailed vision for financial inclusion and financial deepening in India. Key recommendations of this included measures for improving the viability of the BC model.

Towards achieving this august objective of financial inclusion, there have been sustained efforts by the Government of India and RBI over the past few years. Some of the initiatives undertaken by the Government and RBI are: Expansion of bank branch and ATM network in the country, increased focus on opening bank branches in rural areas, expansion of BC network, Direct Benefit Transfer (DBT) to beneficiary accounts, providing RuPay card, Pradhan Mantri Jan-Dhan Yojana (PMJDY) which includes aspects of credit and insurance and more recently the differentiated banking licenses to payment banks and small finance banks.

However, despite being operational for almost a decade, India’s BC model has been relatively unsuccessful in achieving the goal of effective financial inclusion.

This Policy Note explores some ideas and thoughts which can help the policy makers and regulators to achieve their vision of complete financial inclusion. This Note presents a few compelling out-of-the-box ideas in terms of having ubiquitous agent points, employing white label business correspondents, accepting eKYC documents, harmonising KYC documents, bringing in better liquidity management processes and coming up with effective agent training methods etc.

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