Lessons From the Costing Study on BC Networks

This note discusses some of the main findings from a costing study conducted on four banking correspondent network managers (BCNM) and their business correspondent agents (BCAs). The study was conducted to ascertain the costs involved in providing savings, withdrawals, deposits, and remittances to the under-banked population. The note highlights how some of the lessons learned from the study can be used to develop a sustainable delivery model to offer financial services to the financially underserved population in India. It states that BCNMs form a critical link in the financial inclusion value chain by managing a network of agents who perform banking services in underserved areas. Key findings of the study include:

• Total channel costs of BC outlets are generally higher than total revenues;
• How the BCNM and BCA split the total channel costs varies greatly across the model assessed;
• BCAs who fared better offered more than standard cash-in cash-out (CICO) products;
• Viability and profitability at both the BCA and BCNM level depends on the underlying business volumes;
• While revenue arrangements differ across banks, the revenue pay-out is often in relation to how much business a BCNM is able to do;
• Basic minimum remuneration for BCAs must be ensured.