Agents should be given a fixed remuneration to ensure viability of business correspondents: BCFI

Banks should give their agents or business correspondents a fixed remuneration to help them tide over the losses they have incurred due to the coronavirus outbreak, the Business Correspondents Federation of India said in a press statement on June 4.

"There is a demand from the federation towards banks to provide their agents Rs 5,000 per month per agent for the next six months starting from April 2020, to compensate for the income loss they have incurred during the lockdown. Further their performance criteria can also be relaxed so the business becomes viable," said Seema Prem, chief executive officer, FIA Global.

BCFI is the industry body for business correspondents or 'bank mitras' who provide rural payments, account opening and other basic banking services to customers. Despite lockdown, the business correspondent business of banks continued to remain operational. Their main job was to process cash outs for rural poor who received support money from the government in form of Direct Benefit Transfers.

Explaining the current remuneration structure, Prem said agents have a fixed income and a variable component which is determined by the number of transactions they process. For the fixed component the agents need to be online for atleast 21 days in a month and undertake minimum 100 transactions monthly. Some of these criteria could be relaxed, she said.

"We have engaged multiple times with the department of financial services and the finance ministry with regards to these demands from the industry," said Sasidhar Thumuluri, Chairman, BCFI.

While the BC industry has played an important role in disbursing DBT payments to the last mile, Sunil Kularni, chief business mentor at Oxigen Payments said that remittance volumes have fallen drastically. As of April, the domestic remittance business was down more than 70 percent, he said.

"We are hoping to see some resumption with economic activity showing early signs of pick up, till then our major business has happened through AePS cash outs and DBT transfers," Kulkarni said.

he surge in cash out transactions have not helped in the financial recovery of these businesses, since its allied offerings like ticket bookings, hotel reservations, bill payments and recharges to a certain extent have been affected by the nationwide lockdown. Prem pointed out that there was a decline in viable transactions and more small value transactions happened through the network, which caused incomes for agents to fall drastically.

Some of these companies have also looked at coronavirus as an opportunity and has forayed into adjacent business opportunities.

Anand Kumar Bajaj, chief executive officer of PayNearby, said he has created a JobsNearby portal through which migrant workers who have lost their jobs in cities can get placed at local industrial units.

"If a worker was getting Rs 20,000 in Mumbai and saving nothing, may be he can find a job in Khagaria, Bihar for Rs 8000 but still manage to survive in these tough times, that is what we are trying to do through this initiative," Bajaj said.

Follow our full coverage of the coronavirus outbreak here