Building Viable Agent Models

This paper presents a framework on how to build successful agent models on the basis of MicroSave's experience in India. The analysis conducted and evidence arrived at was made available to the Reserve Bank of Indias Committee on Comprehensive Financial Services for Small Businesses and Low Income Households. The paper provides statistical information on the status of agent networks in India, stating that it has very poor reach, is of poor quality, and has very low levels of activity. It discusses the design features of a successful agent network and illustrates it using examples. Key recommendations made by MicroSave include:

• Rationalize allocation of villages/panchayats to banks, cluster and isolated set of villages are extreme approaches;
• Implement the recommended 3.14% minimum commission per transaction. Mandate a minimum share of payout to agents for Government to Person (G2P) payments;
• Remove the confusion over the need to withdraw all benefits credited;
• Focus on monitoring account activity;
• Allow mobile network operators to act as issuers of e-money with proportionate supervision;
• Introduce standards for integration and interoperability;
• Mandate agents to have bank accounts. These can be used for liquidity management instead of transiting cash long distances.