India's business correspondence sector to cross Rs 147 billion by FY2025: Report

As per the report by digital service provider, growth is being driven by the expansion of the Pradhan Mantri Jan Dhan Yojana (PMJDY), deeper penetration of Basic Savings Bank Deposit Accounts (BSBDAs), and the increasing popularity of Direct Benefit Transfer (DBT) schemes that channel subsidies and welfare funds directly to beneficiaries.

Business Correspondents are bank-appointed representatives who deliver essential banking services in underserved and remote areas.

Functioning on a commission-based model, BCs operate as the extended arm of formal banking institutions, enabling last-mile delivery of financial services. They earn either a fixed fee or a percentage of the transaction value, depending on the type of service provided.

According to the report, the industry grew from Rs 47 billion in FY2018 to Rs 102 billion in the financial year 2023 (FY23).

The report added that as rural households adopt formal financial services, transaction volumes have spiked, particularly in areas where physical bank branches remain scarce.

"With over 1.35 million BC agents operating across India as per PMJDY report, these banking intermediaries are enabling millions of people--especially in rural regions--to access financial services. From cash deposits, withdrawals, and remittances to bill payments, Aadhaar-enabled services, and microfinance lending, BCs have become an essential bridge between formal banking institutions and the underserved population," said Shikhar Aggarwal, Chairman, BLS E-Services.

The report further added that the rise in BSBDAs under PMJDY has also contributed significantly to the sector's momentum.

As per the report, the number is expected to exceed 550 million by FY2025 from 380 million accounts in 2020.

Most of these accounts are held by rural customers, and the majority of transactions--such as benefit disbursals under DBT, cash withdrawals, and remittances--are executed through BCs using Aadhaar authentication.

According to Lokanath Panda, COO, BLS E-Services, "The Business Correspondent (BC) industry is projected to grow at a 19 per cent CAGR from FY22 to FY25P, expanding from Rs 102.9 billion to Rs 147.4 billion. Key growth drivers include the expanding rural outreach of BCs, rising BSBDA accounts and deposits, increased transaction volumes, and the growing adoption of government DBT schemes."

The report added that the technological integration has further strengthened the BC model.

Platforms such as UPI, Aadhaar-enabled Payment Systems (AePS), RuPay, and IMPS, along with mobile banking applications, have made financial transactions more secure and accessible, even in the country's most remote corners.

According to NPCI data, over 520 million AePS transactions are already being processed every month, with Business Correspondents playing a pivotal role in this volume.