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Dvara Analysis Weblog | An Agent Success Framework – Half II : Are Agent Networks capable of supply entry to dependable CICO? 


Natasha D’cruze

This collection of weblog posts paperwork Dvara Analysis’s ongoing work on the position of enterprise correspondent (BC) networks in offering cash-in, cash-out (CICO) companies throughout the size and breadth of India. 

Within the earlier submit on this collection, we highlighted the challenges clients face when accessing CICO companies. Right here, our focus shifts to the availability facet of the equation, exploring the literature detailing the problems CICO brokers face in providing uninterrupted CICO companies. Brokers who present CICO companies typically encounter vital obstacles that hinder their capability to help clients successfully.

The next part explores every of those considerations and their implications for the CICO community.

Profitability considerations

Brokers in India earn a lot lower than brokers in different nations as a result of the working bills in India are increased than in different South Asian nations and East African nations. These bills are pushed by units to conduct transactions, the lease of the store, electrical energy, and journey bills for liquidity administration, which represent the majority of operational bills for brokers[1]. Following a commission-based system, the financial institution pays enterprise correspondents (BC) at a charge of 0.5% of the transaction worth or Rs. 15, whichever is much less. As BCs tackle all of the dangers and gear expenditures related to this commission-based income mannequin, it’s difficult for them to keep up their enterprise. Though the federal government was urged by the Enterprise Correspondent Federation of India (BCFI) to both repair a month-to-month revenue for BCs[2] or set the fee at 1% of the transaction cost, this has but not transpired[3].

The present compensation construction for brokers is unappealing, which has resulted in diminished confidence within the system and a breakdown of belief[4].  Enterprise correspondents[5] (BCs) partaking in CICO actions are inadequately compensated for the danger related to dealing with bodily money. Moreover, they obtain no security insurance coverage, which locations  large psychological burden on them, and monetary legal responsibility upon loss.  Inadequate compensation will increase the load on the brokers who already bear excessive set-up prices to additionally make sure the sustenance of their enterprise, which restricts them to providing solely subpar service high quality, and restricted entry for the general public.

As well as, contemplating the place of the enterprise correspondent community managers (BCNMs), a costing research[6] carried out by Microsave (2015) on 4 BCNMs and their related BC brokers to establish the prices related to offering monetary companies to the underbanked inhabitants in India revealed that the overall channel prices for a BC outlet surpassed the mixed income earned by each the BCNMs and BCs. Price distribution varies throughout totally different fashions, with kiosk-based fashions incurring decrease prices on the BCNM stage than different fashions, nevertheless, the kiosk-based mannequin’s BC-level value was the very best. Excessive-performing BC brokers present further companies that transcend normal CICO merchandise, comparable to insurance coverage, mounted/recurring deposits, cellular top-ups, enterprise facilitator companies, and many others. which may result in elevated enterprise volumes, a vital consider enhancing the viability and profitability of each BCs and BCNMs. The BCNMs’ institution of a BC community was worthwhile in areas with lively remittance corridors, nevertheless it was financially troublesome for each BC and BCNM in areas with much less enterprise potential, which requires a better have a look at how a lot these service networks are costing.

Refusal of TDS exemptions

A provision within the Indian Revenue-tax Act, Part 194N, mandates TDS on money withdrawals on the charge of two% in case the mixture money withdrawal exceeds rupees one crore. An express provision, nevertheless, states that these provisions wouldn’t apply to any BC of a banking firm. This was made to keep away from casting an unfair burden on people and establishments dealing with substantial money quantity as a part of enterprise operations[7]. Though there’s a provision in place that exempts BCs from TDS deductions, some banks have been noticed to erroneously apply TDS coverage to BCs who withdraw money from banks aside from their affiliated establishments. This is because of a flawed interpretation of the legislation, because the exemption is perceived to solely apply to BCs related to the issuer financial institution and never with different banks. Consequently, BCs face vital capital blockage, which hinders their entry to funds till they file their revenue tax returns and obtain refunds[8].

GST Points

Though the Central Board of Oblique Taxes and Customs (CBIC) has authorized nil GST for rural and Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders, this waiver isn’t utilized in remittance transactions as a result of the Indian Monetary System Code (IFSC) used for transactions doesn’t differentiate between rural or PMJDY accounts. Consequently, banks and brokers pay GST on all remittances to keep away from any compliance points[9]. This results in an added burden for CICO brokers who largely function in rural areas and play a key position in dealing with remittance transactions with PMJDY accounts. The GST that’s incurred on such transactions poses a further value to them, additional lowering their revenue margins. Regardless that there’s a GST waiver, in principle, it stays underutilized because the brokers proceed to pay the tax. This extra value has a direct implication for his or her viability as a enterprise, and in flip, hampers the unfold of banking and monetary companies to less-profitable places.

Inadequate liquidity administration help

BC brokers battle with the shortage of help for liquidity administration as a result of they have to depend on their very own funds and sporadic float help from distributors. Distributors function a hyperlink between the BCNM and the BC brokers, engaged on behalf of the previous. They’re incentivised to onboard new brokers and play a key position in scaling up the agent community. This has benefited new-age BCNMs in scaling up their companies in numerous geographies by tapping right into a community of distributors who help retailers with BC operations[10].  The dropout of distributors can adversely have an effect on their enterprise operations, resulting in a scarcity of sources and a scarcity of liquidity[11].

Clearly, a wide range of frictions exist within the agent’s enterprise mannequin. These frictions are associated to and are doubtless the reason for among the points that clients face whereas accessing CICO companies (see earlier weblog right here). Resolving these ache factors within the CICO mannequin would require one to take a 360-degree perspective and incorporate the experiences of all related stakeholders. Accordingly, within the subsequent submit on this collection, we unpack a conceptual framework referred to as the ‘agent success framework’. This framework is meant to help key decision-makers in figuring out the place the CICO enterprise might be made extra accessible for the client, and worthwhile for the brokers and community managers.

[1] Wright, G. (2021, November 08). The agent profitability conundrum in India – time for differentiated brokers? Retrieved March 31, 2023, from https://www.microsave.internet/2018/05/03/the-agent-profitability-conundrum-in-india-time-for-differentiated-agents/

[2] Manikandan, A. (2019, April 11). Enterprise Correspondents’ Revenue Mannequin primarily based on commissions unviable. Retrieved March 31, 2023, from

[3] With a fee of RS 15, RBI’s enterprise correspondents mannequin could be failing authorities’s monetary inclusion plans. (2020, November 25). Retrieved March 31, 2023, from

[4] Kale, S. (2021, March). Powering monetary inclusion by strengthening the agent ecosystem – indicus. Retrieved March 31, 2023, from

[5] Enterprise Correspondents or BCs are brokers of banks, offering fundamental monetary companies to clients in areas the place financial institution branches aren’t accessible.

[6] Balani, J. (2015, Might). Microsave India focus be aware #115. Retrieved March 31, 2023, from https://www.microsave.internet/wp-content/uploads/2018/10/IFN_115_Lessons_from_BC_Costing_Study.pdf

[7] I.T. Division Central Board of Direct Taxes (2021, January). Perceive the TDS implication on money withdrawals-194n. Retrieved March 31, 2023, from

[8] Valenti, F. (2021, July). Tax reforms to extend the viability of enterprise correspondents. Retrieved March 31, 2023, from

[9] Kale, S. (2021, March). Powering monetary inclusion by strengthening the agent ecosystem – Indicus. Retrieved March 31, 2023, from

[10] Microsave (2020, September). The rise of new-age BCNMs: Transformation of agent networks in India- Microsave. Retrieved April 6, 2023, from https://www.microsave.internet/wp-content/uploads/2020/10/The-rise-of-new-age-BCNMs-Transformation-of-agent-networks-in-India.pdf

[11] Bhavnani, D. (2022, April). Predominant cash-in cash-out (CICO) fashions in India – Microsave. Retrieved March 31, 2023, from https://www.microsave.internet/wp-content/uploads/2022/04/220426_CICO-models-and-MSC-pilots_v1.0.pdf

Cite this weblog:


D’cruze, N. A. (2023). Are Agent Networks capable of supply entry to dependable CICO? . Retrieved from Dvara Analysis.


D’cruze, Natasha Agnes. “Are Agent Networks capable of supply entry to dependable CICO? .” 2023. Dvara Analysis.


D’cruze, Natasha Agnes. “Are Agent Networks capable of supply entry to dependable CICO? .” 2023. Dvara Analysis.



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