Bank Sakhi Programme: Accelerating Inclusive Growth through Women Catalysts

The Business Correspondent (BC) model, introduced in 2006, aims to extend essential banking services, such as savings and loans, to underprivileged and unbanked populations. To achieve this, banks can engage third-party agents, including companies, retired bank employees, government agents of Small Savings Schemes, retired teachers, Self-Help Group (SHG) functionaries, and other authorized individuals or entities.

BCs play a crucial role in financial inclusion by identifying borrowers, assisting in loan processing, disbursing small-value credit, collecting deposits, managing loan repayments, and facilitating the sale of micro-insurance, pensions, and remittance services. Additionally, they support the formation and monitoring of SHGs and Joint Liability Groups (JLGs), empowering communities with access to credit and financial stability.

Bank Sakhi Model

The Bank Sakhi model is a gender-specific adaptation of India\'s BC model (2006), designed to transform rural banking through women business correspondents. The female Banking or BC model, introduced in 2015-16, is endorsed by the National Rural Livelihood Mission (NRLM) and supported by the World Bank under the Digital Financial Inclusion (DFI) initiative focused on Lower Income States. As part of this initiative, the Bank Sakhi model has rapidly gained momentum across rural India, operating within a broad network that includes State Rural Livelihood Missions (SRLMs), Banks, and Community-Based Organizations (CBOs).

As per the Deendayal Antyodaya Yojana- National Rural Livelihood Mission (DAY-NRLM), a Bank Sakhi is defined as an SHG member who supports the Branch Manager by working within a bank branch. Conversely, an SHG member who conducts banking transactions in the field using a laptop, desktop, mobile, or tablet is termed a BC Sakhi. The term Bank Mitra is used by the Department of Financial Services (DFS) and banks to describe existing BC Agents within the banking system. However, there are some SRLMs, where BC Sakhis are referred to as Bank Sakhis. Thus, the terms Bank Sakhi, BC Sakhi, and BC Agent are used interchangeably in the Indian financial landscape.

Eligibility Criteria

To qualify as a Bank Sakhi, the individual must be a woman SHG member for at least 12 months, preferably aged between 22 and 45, literate with a minimum 10^th or 8^th standard pass, and proficient in reading and writing. Moreover, a Bank Sakhi is expected to be a representative of her community, emphasizing a connection to the grassroots level, but should not hold any official position within a bank. The other prerequisite is a clean financial record with no history of defaulting with either the SHG or the bank. Lastly, proficiency in using a smartphone is a crucial requirement for effective engagement in the role of a Bank Sakhi.

Capacity Building

SRLMs, in collaboration with local banks, corporate BC agent network managers, and other financial institutions, provide comprehensive capacity-building, training, and back-end support to Bank Sakhis. Capacity-building efforts encompass initial training, continuous handholding, and regular monitoring of Bank Sakhis.

Financial Support to Bank Sakhis

SRLMs extend financial assistance to Bank Sakhis through a combination of partial grants, incentives, and low-cost credit facilitated by community institutions. This support helps them cover initial investment needs, such as acquiring hardware devices and securing working capital for their first transactions.

In general, Bank Sakhis earn a transaction-based commission from banks for delivering financial services, without any additional charges to customers. However, to ensure financial stability in the initial phase, many SRLMs also provide honorariums for the first few months until operations gain momentum and revenue streams become sustainable.

Dual Authentication and Micro-ATM

Dual authentication is a security measure that requires approval from at least two designated SHG leaders, who serve as account signatories, to authorize financial transactions like withdrawals and fund transfers. A Micro-ATM is a device equipped with a printer and biometric reader, enabling SHGs to conduct financial transactions seamlessly. It allows SHGs to collect and deposit savings, transfer funds between group and individual accounts, and manage Cash Credit Loan accounts through dual authentication.

Dual authentication and micro-ATMs help banks by boosting transactions, channeling funds, and handling low-value operations through Bank Sakhis. For SHG members, they save time, offer quick services, build credit history, and ensure transparency with instant receipts.

Alignment of the Bank Sakhi Programme with Sustainable Development Goals (SDGs)

The Sustainable Development Goals (SDGs), established by the United Nations in 2015, comprise 17 goals aimed at achieving a more just, equitable, and sustainable future. The Bank Sakhi Program supports this global framework by empowering rural women and promoting financial inclusion.

• SDG 1 (No poverty): The program tackles poverty by removing barriers to financial services for rural women. Secure saving options promote financial planning and provide a safety net for unforeseen circumstances.
• SDG 3 (Good health and well-being): Financial empowerment through Bank Sakhis also contributes to good health and well-being. Increased financial independence empowers women to prioritize healthcare for themselves and their families.
• SDG 4 (Quality education): The Bank Sakhi Programme contributes to quality education by enabling women to utilize their surplus income to provide better educational opportunities for their children.
• SDG 5 (Gender equality): The program advances gender equality by expanding women\'s financial access, workforce participation, and independence, while also reducing gender-based violence and enhancing autonomy.
• SDG 8 (Decent work and economic growth): The program promotes economic growth by empowering women entrepreneurs, boosting local economies, creating jobs, and enriching the workforce with diverse skills.
• SDG 10 (Reduced inequalities): By bridging the gender gap and empowering women to build wealth, the program enhances financial inclusion, thereby reducing economic inequality.

Milestones Achieved in Bank Sakhi Programme

One Gram Panchayat One BC Sakhi

The \'One Gram Panchayat One BC Sakhi\' initiative, introduced by the DAY-NRLM under the Government of India in 2019, envisions deploying one Bank Sakhi in every Gram Panchayat by the end of 2023-24. The objective was to create a cadre of 1.25 lakh trained and certified women from SHGs to serve as BC Sakhis by 2023-24, ensuring last-mile financial inclusion in rural areas. The initiative surpassed its target with 1,27,074 BC Sakhis deployed across 27 states by 2023-24.

Community Based Repayment Mechanism (CBRM)

To ensure timely repayments by SHGs, the NRLM and SRLMs introduced CBRM, leveraging the active participation of Bank Sakhis to strengthen financial discipline. The number of Bank Sakhis engaged in CBRM steadily rose from 8,600 in 2017-18 to 45,387 in 2023-24.

Role of BCs during the pandemic

The pandemic highlighted the need for women-centred financial inclusion, as women are more vulnerable to crises. During COVID-19, Bank Sakhis played a vital role in facilitating cash transfers and providing essential banking services, particularly in rural areas.

Role of Bank Sakhis in accelerating PMJDY

The Pradhan Mantri Jan-Dhan Yojana (PMJDY) initiative has been highly successful, with 55 per cent of the 45.2 crore accounts being opened by women until 2023. PMJDY\'s success owes much to the BC model, with local BCs building trust and connecting communities to essential banking services in rural areas.

JEEVIKA Bank Sakhi Programme

The JEEVIKA Bank Sakhi Programme, led by Bihar Rural Livelihoods Promotion Society (BRLPS-JEEVIKA) trains SHG women to deliver banking services in rural areas. JEEVIKA Bank Sakhis outperform male and non-JEEVIKA agents, earning over ₹5,000 monthly within 6-9 months, making it a sustainable, empowering livelihood.

Impact of the Programme on the Economy and Society

• Services to underserved population and capital accumulation: Bank Sakhis drive financial inclusion by serving remote and underserved communities, promoting financial literacy, encouraging savings, and channeling idle rural funds into formal financial systems.
• Enhanced loan repayment rates: As local representatives, Bank Sakhis assess community loan needs, recommend suitable schemes, and improve awareness of bank offerings, leading to better loan planning and higher repayment rates.
• Migration of low-value transactions to low-cost channels: Bank Sakhis reduce the operational burden on bank branches by handling routine transactions, enabling staff to focus on complex tasks, improving efficiency, and cutting costs.
• Secured financial services: Studies suggest that female agents demonstrate lower susceptibility to fraud, enhancing the security of the Bank Sakhi programme.
• Facilitates female customers: Many customers find female BC agents more patient and approachable, facilitating trust and better financial guidance.

Impact of the Programme on Bank Sakhis

• Increased independence in social engagement: The Bank Sakhi program has empowered women, enhancing their autonomy and mobility.
• Enhanced participation in household decision-making: Bank Sakhis now play a greater role in family decisions, from medical and education expenses to asset purchases.
• Enhanced financial growth: Exposure to advanced financial services has deepened their understanding of various financial products, leading them to avail themselves of insurance, loans, and pension products.
• Improved skills and confidence: The Bank Sakhi initiative boosts women\'s confidence by equipping them with banking, record-keeping, and computer skills.

Challenges Faced by Bank Sakhis and Strategic Solutions

• Disparity in earnings and Gender Gap in BC Networks: Male BCs earn four times more than Bank Sakhis due to a limited range of services and balancing household duties. Solution: Train Bank Sakhis in high-revenue services, provide access to prime locations, and offer financial incentives.
• Mobility issues: Remote rural areas with limited or expensive transport place a financial strain on Bank Sakhis. Solution: Provide comprehensive risk coverage during travel and explore partnerships with local transportation for subsidized travel options.
• Societal expectations: Societal norms discourage prioritizing work over family. Solution: Conduct community sensitization programs to educate families about the invaluable role Bank Sakhis play.
• Perception as a \"Ladies Programme\": Some men view it as less relevant to their needs. Solution: Conduct structured awareness campaigns highlighting business potential and engage male allies.
• Business and Operational challenges: Challenges include lack of access to finance, cash withdrawal limitations, server disruptions, and biometric failures. Solution: Enhance liquidity, prioritize system upgrades, and provide dedicated helplines.

The Way Forward

Building on the success of the BC model, banks should broaden BC services to include loans, insurance, pensions, and mutual funds. Mobile banking must also adopt secure joint account access, like Aadhaar Enabled Payment Services (AEPS)-based biometric authentication. Raising BC transaction limits will allow smoother fund transfers, and a mandate for at least 30% female BC agents in underserved areas will further strengthen financial inclusion.

Conclusion

The Bank Sakhi Programme stands as a commendable initiative, making significant strides in promoting financial inclusion, particularly among women across diverse regions. Scaling and sustaining the programme requires collaborative efforts with banks, national payments councils, fintech, microfinance, civil society, and funding organizations both nationally and internationally.