Growing internet penetration across India has accelerated the demand for digital banking services. However, the country’s highly geo-distributed demographics pose a challenge to its financial inclusion mission.

Much of Bharat – rural India – is still technologically shy, plagued by technological inhibitions and lacking confidence in any form of financial transaction.

This growing need to amplify reach and break into untapped markets is driving financial institutions to dispense with branches and offer their services in last-mile assisted mode with the help of fintech startups.

Remote banking facilitated by Business Correspondents (BC) is the new mantra of the banking sector. This is evident in RBI’s 2021-2022 annual report, which states that the total number of outlets serviced by CBs saw a 114% increase reaching 32+ lakhs in December 2021, compared to just 15+ lakhs in 2021.

Need for remote banking in India

The lack of financial knowledge and the scarcity of traditional financial institutions have forced the rural population to rely on centuries-old informal mechanisms that are often insufficient, unreliable and costly. In order to provide financial services to everyone, everywhere, various financial institutions have started offering branchless banking services to a wider range of consumers.

However, for India to be financially inclusive, branchless banking must go beyond a simple banking transaction and cover associated services such as savings, credit and insurance while developing a service model holistic.

Branchless bank vs traditional bank

Branchless banking helps underbanked and unbanked people. It identifies the gaps in traditional financial offerings and designs a product or service that fills that gap.

Today, even formal financial institutions are taking inspiration from the industry and seeing branchless banking as a way to reduce costs and improve the customer experience. It is safe to assume that in the future, although bank branches will continue to exist, their size and number will decrease.

Branchless banking will complement traditional banking and help create a more comprehensive infrastructure with equal access for all.

Who are Correspondent Banking (CB)?

Gone are the days when residents of the country had to visit a bank just to check their account balance. The model is now being used to serve people in rural areas who are limited by illiteracy and lack of technological skills.

Fintech startups in India are innovating at breakneck speed to provide convenience to consumers.

Since most of India’s population lives in villages, it is imperative that a strong network is in place, both digital and assisted, to enable beneficiaries to benefit. This is where BCs come in. They have played a pivotal role in ensuring the last mile has access to resources, especially during the pandemic. They act as pillars that harmonize the provision of essential financial services like cash deposits and DBT (Direct Benefit Transfer). They ensured that the most disenfranchised groups quickly received relief money during the lockdown.

Thanks to them, India is rapidly transforming into a financially inclusive and accessible economy, one PIN code at a time.

Cost and reach of branchless banking

For people at the bottom of the pyramid, the main challenge in accessing banking services is not just affordability, but also the applicability and accessibility of services. For branchless banking to work effectively in India, it must fit four parameters: availability, applicability, acceptability and affordability.

Often, branchless banking is thought of as setting up a distribution network for account opening, cash deposit, cash withdrawal and money transfer, but it is much more. that. It offers a range of financial products, from basic banking services to affordable investments and lending to the last mile. Since the infrastructure cost is negligible and runs on existing infrastructure, the cost of maintenance is much lower than setting up bank branches and ATMs.


Since the lockdown, remote banking has grown considerably. One cannot ignore the role of Aadhaar Banking in disbursing DBT funds to the masses during the pandemic. The government’s DBT of Rs 1.7 crore lakh to the poorest areas most affected by the pandemic has been successfully executed thanks to the tireless efforts of the network of banking agents across the country.

Also, not having branches would benefit everyone in many other ways. On the business side, operating and management costs will be reduced. Customer demands can be satisfied with an improved experience. It will also help facilitate door-to-door delivery of essential banking services in rural India.

On the consumer side, financial transactions will become easy and convenient to perform from any location at any time. With greater reach and equal opportunities for all, everyone will be able to take advantage of all banking facilities, ultimately paving the way for realizing the dream of a financially self-sufficient India.

(The author is the Managing Director and CEO of PayNearby – a digital banking company)