It’s 7 a.m. in a remote village in India’s Bihar state. Punam Kumari, a bank sakhi, is ready to serve her customers. Many of them have already arrived at her customer service point (CSP). She ensures that everyone is complying with social distancing norms while she also takes COVID-related safety precautions for transactions she conducts.
This early morning routine represents a major shift in how she works. She used to open her outlet at 10 a.m., but since the lockdown was imposed by the government to curb the spread of COVID-19, she has been working from 7 am to 7 pm providing financial services to the village. She caters to customers at her CSP outlet and at a nearby school, where she’s set up shop at the request of local authorities.
Thanks to bank sakhis, accessing money during COVID-19 has been made easier for rural women.
Thanks to her and her colleagues, known colloquially as bank sakhis, what would otherwise have been a daunting task of accessing money during COVID-19 has been made easier for rural women. Bank sakhi – literally “female banker friend” in Hindi – is an informal term for female banking agents, who are collectively known in India as business correspondents (BCs). Equipped with smartphones, tablets, or laptops and biometric scanners, they provide basic banking services and financial access for women, self-help groups and many others in some 20,000 difficult-to-reach villages in rural India. Punam has been a bank sakhi since 2018 after her husband passed away, and she needed a way to support her three children.
The Banking Correspondent Model Works Toward Gender Equality
The BC model, supported by the Reserve Bank of India (RBI) since 2006, allows third-party agents to provide banking services on behalf of banks, eliminating the need for brick-and-mortar structures. In 2015-16, a female BC model was promoted by the National Rural Livelihoods Mission (NRLM), with support from the World Bank, financed the National Rural Livelihoods Project (NRLP), which was built on the GIZ-NABARD experience. This pilot initiative helped in reducing the gender gap in access to financial services and provided a regular income stream for local women who were trained and employed as BCs. Fifty-four percent of Pradhan Mantri Jan Dhan Yojana (PMJDY) accountholders are women and, unofficially, most BC agents are men, but these women BC agents are servicing first-time women customers and challenging gender disparities in an otherwise male-dominated profession. On average, approximately 6000 NRLM BCs across 9 low-income states collectively complete 700,000 transactions each month, worth over INR 2.5 billion.
Leveraging the Power of Business Correspondents During the Pandemic
In the past couple of months, Punam’s business volume has increased considerably due to the government-initiated direct benefit transfer (DBT) schemes as part of the Pradhan Mantri Garib Kalyan Yojana (PMGKY) – COVID-19 relief package announced by the prime minister on March 26. Under the PMGKY, 206 million PMJDY women account holders are now receiving INR 500 per month for three months.
During the COVID-19 lockdown, BC agents have proven effective in the delivery of financial services in rural areas and have been granted exemption because the Indian government has now classified their services as essential. In Bihar, Odisha, Madhya Pradesh, Jharkhand, Chhattisgarh and several other states, bank sakhis have continued working to provide cash flow in their villages since the lockdown. They now wear gloves while conducting the transactions, regularly sanitize their devices and require all customers to wash or sanitize their hands before completing the required biometric scanning. While they’ve had to discontinue service delivery at their customers’ doorsteps during this period, they’ve set up services from home, roadsides, and are helping with information dissemination in communities, ensuring that their customers are aware of COVID-19 guidelines on quarantine, handwashing and social distancing.
Insights on BC Transactions During the COVID-19 Era
A quick review of daily transactions of 39 bank sakhis (SHG-BCs in the graph below) of a private sector bank in rural Bihar — the data was collected from mid-March to April — reveals three interesting points:
- An initial drop in daily transaction volumes immediately after the lockdown was announced. These 39 agents conducted 3035 transactions worth about INR 9 million in mid-March, which dropped by about 50 percent to 1629 transactions and INR 4.5 million right after the lockdown was announced.
- A spike in transactions in the first week of April corresponding with the release of the first tranche of the PMGKY G2Ps cash transfers. While the size of transactions in the first week of April is lower than in the preceding weeks, cash flow resumed in the rural economy. The agents completed 4895 transactions by April 10, 2020, but with a lower value of INR 7.6 million and this uptick continues through May.
- A corresponding increase in transaction failures. These are largely due to network and bandwidth requirements for a spike in demand for services, mostly in the case of inter-bank transactions.