India's last-mile banking agents face sustainability crisis from cost pressures

The banking correspondent network, which serves as a critical bridge for financial services delivery in rural and semi-urban India, is facing mounting operational challenges due to a widening gap between costs and earnings. BC agents operating in remote areas report that current commission structures fail to offset expenses for infrastructure, technology, and compliance, creating viability concerns for the extensive network that reaches millions of previously unbanked Indians.

The National Strategy for Financial Inclusion 2025-2030 has identified fair and reasonable remuneration as a prerequisite for maintaining service quality and consistency across the last-mile banking ecosystem. The policy framework emphasizes that without adequate compensation structures, banking correspondents may be forced to reduce service hours, compromise on customer experience, or exit the sector entirely.

Industry stakeholders argue that commission models have remained largely stagnant despite significant increases in regulatory requirements, training mandates, and technology adoption costs. This mismatch threatens to undermine years of progress in financial inclusion, particularly in regions where BC networks represent the only accessible banking touchpoint for rural customers.

The recognition of this challenge in the national strategy signals potential policy recalibration to ensure that last-mile financial service providers can operate sustainably. Experts suggest that any restructuring must balance the need for improved agent profitability with the objective of keeping financial services affordable for end consumers in underserved markets.