To date, the business case for BCs remains uncertain, despite the Reserve Bank of India’s (RBI’s) efforts to relax policy to encourage successful growth of BCs. Nonetheless some commentators do still see the future of financial inclusion and microfinance in India dependent on successful BC models. This Note lays out why a compelling product mix is central to a successful BC network. A client-responsive product mix is likely to create the level of activity necessary to make the BC channel sustainable for both banks and the BC network manager, as well as for individual BCs themselves … thus creating true and meaningful financial inclusion.
Blog
Innovation and Adaptation on the M-PESA Rails
This note examines some of the savings and related services offered to the low income market segment using M-PESA ‘rails’, and highlights the challenges they face. The institutions using M-PESA are working in different areas of financial services, offering savings, loans, health and life insurance, pension and investment products.
It concludes that: 1. the whole cycle of deposit and withdrawal (or indeed loan repayment) through M-PESA therefore becomes an expensive proposition for the customer; and 2. at present financial institutions appear unsure about the overall costs and benefits arising out of their partnerships with M-PESA. All are busy sorting out the operational issues due to integration challenges, and the difficulties of communicating the proposition to customers.
Comparing Business Correspondent With Informal Saving Avenues
This Note focuses on comparing informal saving avenues with “Business Correspondent” (BC) services on a variety of attributes. The dimensions for comparison have been derived from respondents’ perception of qualities that should characterise an ideal saving avenue. These primarily include trust, frequency and convenience of small deposits, benefits such as rate of return, ease of withdrawal, security of the deposits, cost incurred, understanding of the procedures for accessing a particular saving avenue, and other product offerings such as credit.
Why People Do Not Use Present Banking Systems – A Case For BCs
This Note examines the difficulties faced by low income households accessing banking services and presents a case for the acceptance of BC model for expanding the reach of banking services. It concludes that the key objective of financial inclusion, to offer all households affordable financial services, can potentially very well be achieved with BC as a delivery channel, if it can be made viable for banks and BCs.
BancoSol: Latin America’s First Commercial Microfinance Bank Part 1
In this video Jaime Zegarra, regional manager of BancoSol at El Alto in Bolivia talks about the ways in which the bank forms part of the community and connects with its clients. BancoSol is a true microfinance pioneer. As Latin America’s first commercial microfinance bank it has been much copied but never surpassed. Jaime says that they began their coverage of BancoSol by focusing on its operations in El Alto, a sprawling city on the “Altiplano” above La Paz, one of the highest cities in the world.
Revival: Responding to High Dormancy Levels in No Frills Accounts
To March 2010, about 50.6 million No Frills Accounts (NFAs), with an outstanding balance of Rs.53.86 million, were opened by banks. However, a significant number of new customers acquired by banks under the inclusion effort have remained dormant. This Note concludes that although there is high dormancy in the NFAs, these accounts represent a large potential client base. Banks need to work on designing innovative products, improved delivery mechanisms, and appropriate marketing and incentives for the BC model. Customers are willing to pay for the banking services offered by BCs and this user-friendly financial inclusion model can go a long way towards boosting the use of NFAs substantially.