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Women Business Correspondents for Financial Inclusion

GS Paper 3

 Syllabus: Economy: Financial Inclusion


Source: Hindu Business Line

 Context: The State Bank of India’s economic research department suggests that increasing the number of women business correspondents (BC) by implementing a 33% reservation could significantly impact India’s socio-economic fabric.


What is Financial Inclusion?

Financial inclusion refers to the effort to provide access to essential financial services (e.g., banking, credit, insurance,) and products to individuals and communities, especially those traditionally underserved or excluded from the formal banking system. The RBI’s financial inclusion (FI) index shows financial inclusion is improving in India


Who are Business Correspondents? 

Business Correspondents (BCs) are intermediaries appointed by banks and financial institutions to provide banking and financial services in areas where establishing traditional branches may be challenging or expensive. BCs act as a link between banks and customers, offering services such as opening accounts, disbursing loans, collecting payments, and facilitating other financial transactions.

  • RBI launched the Banking Correspondent’s (BCs) model in 2006 to expand Financial Inclusion. E.g., ‘Bank Sakhi’ (or female banker friend) model.


Current status of BCs (as per the report):

  1. BCs operate over 95% of banking outlets in rural regions.
  2. Presently Women agents comprise less than 10% of the BC workforce


Ways in which Women BCs Deepen Financial Inclusion:

Ways Description
Rapport Women BCs can build a rapport with diverse customer groups, promoting demand-driven incremental revenue while advocating for small savings schemes and social security offerings.
Grievance Redressal Women BC agents, with their patience, are more willing to address queries and explain product features, contributing to a transparent and comprehensible financial system.
Encourage Other Females Female customers are more open to sharing their family’s financial issues and needs with female BC agents, fostering a better understanding of product offerings.
Women customers find women agents easier to approach, trustworthy, and great at maintaining confidentiality
Performance Female BC agents demonstrate similar or higher business performance and are more likely to serve customers in remote areas, the elderly, and other underserved sections of the population.
Reports show that increasing women’s involvement in Pradhan Mantri MUDRA Yojana improved the financial status of female borrowers.


Challenges with Women BCs:

Challenges Description
Lack of Financial Inclusion Many WBCs face difficulties in accessing financial services and credit due to their lower socio-economic status and lack of collateral.
Digital Illiteracy A large number of WBCs lack familiarity with digital technology and the necessary skills to use digital financial services effectively.
Minimum Educational Qualification for BCs Minimum qualification is a hurdle for onboarding female BCs.  The current certification requires a 10th pass, but some banks set a higher requirement of a 12th pass.
Societal Attitudes WBCs often encounter societal attitudes that view women as homemakers rather than entrepreneurs, limiting their opportunities for business growth.
Lack of Support WBCs often lack support from government and financial institutions, making it challenging for them to access the resources needed for business growth.
Safety Concerns Operating in rural areas with a high risk of violence and crime, WBCs face safety concerns that limit their mobility and put them in danger during transactions.


Government Initiatives:

  1. One Gram Panchayat One BC Sakhi: It aims to deploy one BC Sakhi in every Gram Panchayat by 2023-24 (it is an initiative by the Ministry of Rural Development)
  2. Pradhan Mantri Jan Dhan Yojana.
  3. Digital Identity (Aadhaar).
  4. National Centre for Financial Education (NCFE).
  5. Centre for Financial Literacy (CFL) Project.


Way Forward:

  1. The present SBI report asks to set 33% reservation in BCs for women.
  2. Reduce entry barriers with equipment, rental support, and initial stipends.
  3. Address mobility issues and offer flexible hours.
  4. Creating a Supportive Environment
  5. Establish women-agent communities
  6. Implement financial literacy programs.
  7. Offer small loans, micro insurance, and low-balance savings accounts.
  8. Address gender-based barriers to financial services.


Insta Links:


Mains Links:

Is inclusive growth possible under a market economy? State the significance of financial inclusion in achieving economic growth in India. (UPSC 2022)

Pradhan Mantri Jan Dhan Yojana (PMJDY) is necessary for bringing the unbanked to the institutional finance fold. Do you agree with this for the financial inclusion of the poorer section of the Indian society? Give arguments to justify your opinion. (UPSC 2016)


Prelims Links

Pradhan Mantri MUDRA Yojana is aimed at (UPSC 2016)

(a) bringing small entrepreneurs into the formal financial system
(b) providing loans to poor farmers for cultivating particular crops
(c) providing pensions to old and destitute persons
(d) funding the voluntary organizations involved in the promotion of skill development and employment generation


Ans: A