Study on Customer Satisfaction Towards the Business Correspondent Model for Financial Inclusion

Abstract

India is one of the pioneers in branchless banking and financial inclusion. However, more than a decade after the first guidelines on the Business Correspondent (BC) Model were issued in 2006, by the Reserve Bank of India, the scheduled commercial banks and other financial service providers in India are struggling to establish a viable and sustainable business model for branchless banking.

To achieve effective financial access for a substantial proportion of the Indian population, all the stakeholders including the government, regulators, service providers, Banks, and Financial institutions need to focus on the key aspects viz. putting in place standard guidelines and establishing accountability through policy intervention, removing implementation bottlenecks, adequate and strategically located access points; enhancing business viability for BCs; assuring better support to BCs and customers; and instituting effective monitoring and supervision mechanisms for these agents and to catalyze radical changes in the way these agents function at present.

The primary focus of the study is to comprehend the suitability of the BC model for Financial Inclusion in the urban slums of Mumbai in the state of Maharashtra, at the backdrop of banking habits and financial literacy. This research paper revolves around and is an attempt to study, evaluate, and assess the contribution of the various stakeholders like Business Correspondents, Corporate BCs with their Customer Service Points, Branch Managers of the Linked Bank Branches, Financial Inclusion Departments of select Banks, and the Customers, towards the achievement of the common objective of the nation of ‘Financial Inclusion’. In the field-level survey, approximately 900 Customers availing banking services through the BC Channel were interviewed to evaluate the level of satisfaction achieved by them and the level of financial literacy gained through BC. 

There is a need to make the business correspondent (BC) industry more investor friendly to take the financial inclusion drive to the last mile in Indi. Business Correspondent is an extended arm of a bank branch, which provides financial and banking services to customers in unbanked and underbanked areas.