However, despite the surge, the average income of banking correspondents has taken a beating due to the low value of transactions.
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.