Banking Correspondent Outlets Fall By 2.3 Lakh In FY25, RBI Data Shows

(MENAFN- KNN India) New Delhi, Jan 2 (KNN) The total number of Banking Correspondent (BC) outlets, last-mile delivery agents providing banking services in remote and unbanked areas, has declined nearly to 13.10 lakh in FY25, from 15.47 lakh in FY24 across the country, according to Reserve Bank of India (RBI) data.

Many of these closures have occurred in villages with populations exceeding 2,000, as per the RBI's Trend and Progress of Banking in India report, reported IE.

The decline follows a rapid expansion phase, during which BC numbers rose from 5.41 lakh in 2020 to 15.47 lakh in 2024. BCs in urban locations fell from 6.35 lakh in 2020 to 3.06 lakh in 2024 and remained marginally higher at 3.09 lakh in FY25.

Sustainability Challenges and Rising Costs

Bankers said the BC model is becoming unsustainable, especially in rural and sparsely populated areas, as low transaction volumes and inadequate commissions fail to cover fixed costs.

A public sector bank official said persistent expenses, rent, electricity, connectivity and travel, along with rising costs for biometrics, cash handling, cybersecurity and networks are squeezing margins without commensurate growth in commission income.

RBI Review of BC Model

The RBI has indicated that it is reviewing the Business Correspondent model and the Kisan Credit Card (KCC) scheme as part of its financial inclusion initiatives.

Villages are predominantly home to economically weaker sections, senior citizens, small and marginal farmers, migrant families and beneficiaries of government welfare schemes.

With the withdrawal of BC outlets, residents are increasingly being deprived of access to basic banking services, including cash withdrawals and deposits, account updates, pension disbursements and grievance redressal.

According to RBI data, there are 72.42 crore Basic Saving Bank Deposit Accounts (BSBDAs) as of FY25.

Industry Bodies Flag Policy Gaps

The Maharashtra State Bank Mitras Association attributed the sharp fall in BC outlets to policy gaps, citing low pay, high costs, technology issues and weak institutional support that have made the model unviable, especially in rural areas.

MSBA president Davidas Tuljapurkar warned that without urgent corrective steps, the Direct Benefit Transfer ecosystem could be disrupted, stressing that sustainable rural banking access is a constitutional and social responsibility.

(KNN Bureau)

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