CAB CALLING |
April - June, 2009
Agent Led or Branchless Banking
What Made it Work Elsewhere
of inclusion.One of the main stumbling blocks to free the payment andThe revolutionary policy initiation, however, had started assettlement and utilisation of off-branch agent network is toearly as January 2006 when RBI came out with the first agentinvolve the stakeholders across the board at an evenlyled or branchless banking initiative in the form of the circular spread risk sharing basis. This requires laying down a finelyon Business Correspondent/Business Facilitator Model,balanced synchronised and shared network with definedwith a fair bit restrictions on eligibility criterion. The importantSLAs and SOPs. A very important step was the regulatorypoint remains that, apart from other lofty intent, it was apolicies of payment and settlement mechanism across themarked departure from conventional thinking and replicatingboard. Brazil and South Africa were able to do it as early asglobal standards set in other terrain. But before we embark2005-06 and continued with the various changes as itupon to evaluate its pros or cons, let us find out other suchexpanded. It is important here to note that M-Pesa, since itsexercise worldwide.first launch, had been able to enrol as many as 700,000customers in the first seven months of its roll out itself. ThisThe early agent based branchless banking was initiated Innumber may look small compared to Indian numbers, butBrazil and Philippines by various entities. Brazil’s variousone should remember the population and size of Kenya, tobanks and its subsidiaries have opened up to 95000 agentthe total teledensity in that country.network spurred by a legal provision where it was allowed“geographic coverage to such a stunning extent: an agent isThe question that wouldlegally able to deposit itsarise, obviously, is whyexcess cash in to itsIndia as a powerhouseaccount with itscould not do so whatsponsoring bankother lesser countriesthrough the branch of could espouse. Theany bank, at no extrasentiment could becost, and without havingechoed in the speechto open an account atdelivered on October 20,that bank.” (Jim
2006 by Dr.
Y.V. ReddyRosenberg, Cgap)who emphasised thatSimilar success storiessafety first for the poorer abound from Kenya,and vulnerable sectionSouth Africa andwas of paramountPhilippines. These areimportance. He saidachievements as aprelude to the current“……e
nsuring safe and expeditious movement of funds at an
day Mobile Money through which Africa and Latin America
optimal cost is the key to success of all payment system
are creating gigantic strides on their initiative of financial
…The relatively late adoption
of technology by us
inclusion. The reference such as M-pesa in Kenya, G-cash in
and the recent initiation of reforms in payment and
Philippines are almost synonymous of such a move. And this
settlement systems have in some way proved to be a sort of
trend was pretty visible as foreseen by David Birch, of cHyp
blessing in disguise by enabling us to take advantage of the
as early as in 2005 December. And it was happening all over
experience of the innovators.”
He continued thus, “ ..
Latin America, Africa, in Philippines and elsewhere.
India, have been attempting an active approach towardsfinancial inclusion in the recent past. Hence, access to fundstransfer services at economical rates to the vast majority of the country’s population would be essential for securing
In the Brazil’s experience, it is important to note that the legal
financial inclusion as also for
reducing the dependence onframework was amended to facilitate the change required tonon-banking channels for remittance of funds.
accelerate the pace of inclusion based on transparency,efficacy and cost effectiveness. Regulatory authorities,By these various assertions, we get to know the regulators’worldwide, are difficult institutions because of their intrinsicconcern as well as the awareness that we were late.nature of the job. But one must appreciate the boldinnovative decisions taken by them to expedite the process