Bank Sakhi: The Unified Payments Interface (UPI) of India accomplished the amazing milestone of 10 billion transactions in August 2023. In the digital payment ecosystem, there is still a rural-urban split despite the remarkable progress. The COVID-19 epidemic has highlighted the significance of female banking correspondents in narrowing the gender gap and enabling India to fully realize its potential in digital payments. forbesindia.com
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BANK SAKHIS ENABLING DIGITAL PAYMENT ADOPTION IN RURAL INDIA
The female banking sakhi or business correspondent (BC) concept was first introduced in 2015–16 and has quickly acquired traction in rural India. It is backed by the World Bank and the National Rural Livelihood Mission (NRLM). Known as the ‘Bank Sakhi’ model, this idea offers a gender-sensitive update to the conventional banking strategy utilized in rural regions. Self-help group members—who are frequently women—provide banking services to places without formal bank facilities.
Given that women make up over half of the Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders in rural and semi-urban areas, the reasoning behind the deployment of women as BCs was well-calculated. Ironically, though, the majority of BC agents were men. To remedy this gap, the Bank Sakhi Program helps first-time female clients navigate the occasionally difficult banking environment.
More than 100,000 women have received training to work as middlemen for 20 states’ public and commercial banks since the program’s inception. These women handle safe online transactions for their clients using the newest gadgets and technology, like cell phones and micro-ATMs. In addition to providing traditional financial services, these banks also train their clients on how to use digital payment systems, educate them on the advantages of digital payments, and handle their worries when a transaction goes wrong.
THE EXPERIENCES OF BIHAR AND ODISHA
Particularly noteworthy has been the success of Bank Sakhis in low-income regions like Bihar, Odisha, and Madhya Pradesh. The Asia Competitiveness Institute’s recent study highlights the importance of Bank Sakhis in developing digital payment potential in these states. These states initially needed better digital competitiveness. However, after the epidemic, they led in digital transactions, mainly due to the Bank Sakhi program’s success. Data from a Bihar-based private sector bank showed that 33 out of 40 Bank Sakhis completed at least one transaction daily between March and July 2020. Meanwhile, in Odisha, 90 out of 126 Bank Sakhis of public sector banks carried out at least one transaction daily.
PIVOTAL IN THE DIGITAL TRANSFER OF COVID-19 RELIEF PACKAGES
SHG members acting as Bank Sakhis led the effort to promote awareness and provide doorstep access to cash transfers during the lockdowns. They focused on the Pradhan Mantri Garib Kalyan Yojana (PMGKY) and other direct benefit transfer schemes. Over 200 million female PMJDY account holders received Rs 1500 each over three months due to this initiative.
To reduce leakages in the Direct Benefit Transfer program, the Indian government chose digital transfers to send money to PMJDY accounts. BC agents play a vital role in raising awareness and using these digital transfers, especially during lockdowns. Lockdown Passes are unique identity cards given to Bank Sakhis to ensure banking functions continue without interruption.
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ROADBLOCKS FACING THE EXPANSION OF THE BANK SAKHI NETWORK
Despite an increase in female BCs in India, as of April 2022, they make up less than 10% of the entire BC network. This is a pitiful proportion. To address this inequality, NRLM Bank Sakhi launched the ‘One Gram Panchayat, One BC Sakhi’ program. This program mandates that by the end of 2023–24, at least one Bank Sakhi will be deployed in each Gram Panchayat.
There are a number of reasons why Bank Sakhis are underrepresented. Bank Sakhis deals with safety issues and mobility challenges. Compared to male BCs, these women face higher transportation costs and safety issues. They often rely on male family members for tasks like visiting bank branches to make cash deposits or withdrawals. Bank Sakhis does not have official financial help to rectify these deficiencies.
Societal expectations require Bank Sakhis to handle both BC duties and household responsibilities. This makes them extremely time-constrained, reducing their efficiency. Male agents do twice as many transactions as Bank Sakhis. They also work an extra three to four hours a day.
