There is an urgent need for co-operation from local administration to allow free movement for banking agents so that business correspondents (BC) can continue operating in the times of a nationwide lockdown, said Business Correspondents Federation of India.
The body has also appealed to banks to ensure sufficient flow of cash in the system so that rural India does not face a severe shortage of this payment instrument.
"There is a need to ensure an uninterrupted flow of cash to the BC network of the country, so that rural demand is met. The home ministry has identified these agents as essential service providers, hence they should be allowed to move freely between branches and open their shops to offer banking services to the poor," said Amit Jain, chief of business operations at Fino Payments Bank.
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The federation highlighted that across the country there has been a drastic fall in activity on the network since the lock down was imposed.
Seema Prem, co-founder of FIA Technology Services a corporate BC serving rural India, said only 30 percent of the transactions are happening on their systems and out of the 2.5 lakh rural retailers overall only 30 percent are online because of government restrictions.
Even for Aadhaar-enabled payments, only 30 to 40 percent of the original volume is being reported in the platform, the federation said.
Business correspondents are corporate bodies which are appointed by banks to take banking services to remote parts of the country. BCs usually onboard local shops, grocers who double up as banking agents. They offer cash deposit, withdrawal, domestic remittance and other services.
Since the spread of COVID-19 in the country, the government has been pushing consumers to go digital and avoid cash transactions. But rural India is still cash dependent and the poor cannot use smartphones for payments. This is where the BCFI has been advocating for more initiatives from banks and the administration so that rural India's needs are taken care of.
The industry has also requested the government to offer Rs 5000 per month per agent for the next three months to incentivise them to offer these services in these tough times. Along with it some insurance cover would help increase confidence.
"There are only 25,000 ATMs in rural areas, even if the government gives direct benefit transfer to the poor they will need BC outlets to access the cash," said Sunil Kulkarni, chief business mentor of Oxigen Services India, a Gurugram-based BC agent.
The federation assured that all safety measures are being put in place in order to prevent contamination among consumers and BC agents. They are being asked to maintain social distance and their hands are also being continuously sanitised.
However, the fear of contamination is real and many employees are not stepping out because of fear. This is creating additional stress for the overall system.