Lok Sabha Question No. 89 (STARRED), answered on 2025-02-10
Subject: Welfare of Banking Correspondents
Ministry: FINANCE
Asked by: Dr. K Sudhakar

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA STARRED QUESTION NO. *89

ANSWERED ON MONDAY, FEBRUARY 10, 2025/MAGHA 21, 1946 (SAKA)

Welfare of Banking Correspondents

## *89. DR. K. SUDHAKAR:

Will the Minister of FINANCE be pleased to state:

- (a)  whether the Government has noticed that large number of banking correspondents today face the issues of survival due to unrevised commission structures and outdating incentives that doesn't adjust with rising inflation levels and if so, the details thereof;
- (b)  the  steps  taken  by  the  Government  to  ensure  that  banking  correspondents channel remains most active to ensure last mile banking connectivity for rural areas of our country along with the steps taken by the Government for the welfare of banking correspondents;
- (c) the total number of banking correspondents currently providing increased financial inclusion for the state of Karnataka; and
- (d)  the total number of Fintech companies currently operational in the country with their total business output and their contribution in today's credit flow markets, State-wise?

## Answer

## THE FINANCE MINISTER (Smt. Nirmala Sitharaman)

(a) & (b) As per the extant guidelines of Reserve Bank of India (RBI) dated 01.07.2014, Scheduled Commercial Banks, including Regional Rural Banks and Local Area Banks, have been permitted  to  provide  financial  and  banking  services  through  the  use  of Business Correspondents (BCs).

Banks  formulate  a  policy  for  engaging  BCs  with  the  approval  of  their  Board  of Directors' wherein the banks may pay reasonable commission/fee to the BCs, the rate and quantum of which  is reviewed periodically.  Further,  Indian  Banks'  Association (IBA) has, in consultation with Banks and Indian Institute of Banking & Finance (IIBF), developed  suitable  training  modules  in  the  local  language(s)  for  providing  proper attitudinal orientation and skills to the BC agents.

BCs get commission for each transaction they perform. Over the years, number of services, which a customer can avail at BC point, has increased and, as on date, BCs are providing up to 56 services to their customers. These include transaction services, PMJDY  account  opening,  deposit  mobilisation,  loan  leads,  NPA  recovery,  Micro insurance, recurring deposit etc. thereby increasing the opportunities available to BCs for earning higher commissions by rendering these services to the customers. Further, for  BCs operating in hilly  areas  &  North-Eastern  States,  NABARD  has launched a scheme wherein an incentive of Rs. 1,000/- per month per BC is given to two top performing BCs per village.

(c) The total number of fixed point inter-operable banking correspondents working in the state of Karnataka as on 31.01.2025 is 56,607.

(d) FinTechs mostly collaborate with Regulated Entities (REs) like banks and NBFCs to provide innovative services/solution to them which brings in speed and efficiencies in various aspects of their working. Generally, these entities work in collaboration with REs as outsourced agencies and are governed under the outsourcing guidelines of the Reserve Bank.  The data relating to these companies is not maintained centrally.