Coronavirus: Rural India to face cash shortage amidst lockdown, says BCFI

The Business Correspondent Federation of India (BCFI), a body representing fintech companies working towards the delivery of financial services to underbanked and unbanked, on Friday discussed challenges arising in the rural economy after the Indian government announced a national lockdown to curb the spread of COVID-19 in the country.

Members of the BCFI also estimate a cash shortage to arise in rural areas of the country as Business Correspondents (also called ‘Bank Mitra’) are restricted from travelling.

The industry body estimated that due to this forced shutdown, only 30 percent of their Business Correspondents are active in rural regions, putting additional operational load on the players.

Post the announcement of the lockdown on Tuesday, the Ministry of Home Affairs came out with a comprehensive list of essential services that will remain operational during the nationwide lockdown.

The addendum to these guidelines included Business Correspondents (in sub-clause B to clause 4) along with IT Vendors for banking operations and cash management agencies as essential services.

Additionally, members also said that owing to the lockdown rural banks were rationing cash  putting more pressure on the liquidity provided to the rural economy.

“There are about two lakh ATMs in the country. Of this, one lakh are on-site, which means that these ATMs are next to bank branches. Of the balance one lakh, 25,000 are ATMs in rural areas which aren’t being serviced, making operations of Business Correspondents even more critical,” explained Sunil Kulkarni, Chief Business Mentor – Oxigen Services India Private Limited and  Board Member, BCFI.

Additionally, Finance Minister Nirmala Sitharaman just yesterday announced Rs 1.7 lakh crore relief package for the economically weaker sections of the society (through Direct Benefit Transfer).

According to BCFI, the inability of BC agents to access this relief cash is a huge concern in ensuring this package reaches the beneficiaries.

The industry body has appealed to the government for financial support as these business correspondents are risking their own lives to rise to the challenge of COVID-19.

While addressing the media, through a digital mode, Anand Kumar Bajaj, MD and CEO of PayNearby and Board Member of BCFI said,

“We urge the government to provide a small remuneration of Rs 5,000 for three months to Business Correspondents to boost their morale and ensure that financial services are catered to in a seamless manner for the rural regions in the country.”

Other members addressing the media were Sasidhar Thumuluri, MD and CEO of Basix Sub-K iTransactions Limited and Chairman of BCFI; Amit Jain, Chief – Business Operations of Fino Payments Bank, and Vijay Pratap Singh Aditya, CEO of Ekgaon Technologies.

  • Source – YourStory