Jan Dhan transactions spur 4-fold surge in demand for banking correspondent

The number of transactions in rural accounts has gone up by nearly 40-45 per cent in the last three months, according to banking correspondent providers
Demand for banking correspondents has surged nearly 4x in rural areas, in the last three months. The spike in transactions among Jan Dhan accounts has driven the same. However, the surge notwithstanding, the average income of banking correspondents has taken a beating, owing to the low value of transactions.

To tide over the economic crisis, the government in March announced an ex-gratia payment of Rs 500 to women Jan Dhan account holders for three months, starting April. This led to a sudden surge in activity — mostly withdrawals — as well as reactivation of inactive accounts.

The number of transactions in rural accounts has risen 40-45 per cent in the last three months, according to banking correspondent providers.

“In pre-Covid times, we were adding 1,000 banking correspondents in a month, on an average. However, since April, we are onboarding 5,000 agents a month. In May, we saw the highest ever onboarding of 5,700+ agents, and are looking to add 6,000+ this month (June),” said  Amit Nigam, executive director and COO of Bankit, a fintech firm.

The fall in average income ranged from 10-15 per cent, according to Seema Prem, CEO of FIA Global (a fintech firm).

“The agents had to work more as the value of transactions was low, which led to lower commissions. Some banks came forward to compensate for this loss by providing incentives. For example, SBI came up with a Covid incentive. Under this, if a banking correspondent was active for 21 days, they would be entitled for an incentive of about Rs 3,000 per month,” said Prem.


Besides a fixed salary, banking correspondents are entitled to get commission for each transaction, depending on the value of such transactions. Salaries of banking correspondents ranged from Rs 11,000-12,000 a month (pre-Covid).

According to Prem, monthly requests for banking correspondents have risen from 100 to nearly 400, in three months.

Between April-end and mid-June, close to 11 million new beneficiaries were added to the Jan Dhan scheme. “In the last three months, there has been a 40-50 per cent rise in transactions through banking correspondents. Over the last few months, their relevance in the banking sector has significantly risen,” said Prakash Prabhu, CEO of Bengaluru-based Atyati Technologies, a technology platform provider for the rural banking sector.

Banks are also looking to augment their rural presence, spearheaded by banking correspondents. For example, UCO Bank is planning to roll out 100-150 rural kiosks for basic banking services, according to A K Goel, the bank’s MD and CEO.

“There has certainly been an uptick in the demand for banking correspondents,” said S Harisankar, MD and CEO of Punjab & Sind Bank.



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel