Beyond Hoopla: Simply Financial Inclusion

This paper examines the problem of financial exclusion in India and the potential of the business correspondent (BC) model as a solution. It recommends that financial inclusion efforts need to directly engage with the last mile customer by offering appropriate financial products and services, including financial literacy. The paper states that the Reserve Bank of India attempted to promote financial inclusion by allowing banks to use BC services in 2006. The BC model played a central role in furthering financial inclusion. However, a chaotic confluence of devices and technology, and the usability and viability debate have besieged the model before it could stabilize, creating an inclusion vacuum in the system. Conclusions include:

• BC model is the only non-community based savings based model that can offer diversified financial services and products at the door-step of last mile customers;
• BC model has a deeper and wider role to play in enabling total inclusion in India;
• Mainstream financial institutions need to change their outlook from compliance based objectives to business based objectives to expedite universal financial inclusion;
• Financial institutions should implement the BC model in tandem with a vision of social inclusion.