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


Natasha D’cruze

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

Within the earlier publish on this collection, we highlighted the challenges clients face when accessing CICO providers. 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 providers. Brokers who present CICO providers usually encounter important obstacles that hinder their capability to help clients successfully.

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

Profitability issues

Brokers in India earn a lot lower than brokers in different international locations as a result of the working bills in India are greater than in different South Asian international locations and East African nations. These bills are pushed by units to conduct transactions, the hire 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 fee 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 earnings 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] performed by Microsave (2015) on 4 BCNMs and their related BC brokers to determine the prices related to offering monetary providers to the underbanked inhabitants in India revealed that the whole channel prices for a BC outlet surpassed the mixed income earned by each the BCNMs and BCs. Value distribution varies throughout completely different fashions, with kiosk-based fashions incurring decrease prices on the BCNM degree than different fashions, nonetheless, the kiosk-based mannequin’s BC-level value was the best. Excessive-performing BC brokers present extra providers that transcend normal CICO merchandise, comparable to insurance coverage, fastened/recurring deposits, cell top-ups, enterprise facilitator providers, and so on. which might result in elevated enterprise volumes, a crucial think about 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, but it surely was financially troublesome for each BC and BCNM in areas with much less enterprise potential, which requires a better take 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 fee of two% in case the combination money withdrawal exceeds rupees one crore. An express provision, nonetheless, 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 apart 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. Because of this, BCs face important capital blockage, which hinders their entry to funds till they file their earnings tax returns and obtain refunds[8].

GST Points

Though the Central Board of Oblique Taxes and Customs (CBIC) has accepted 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 function in dealing with remittance transactions with PMJDY accounts. The GST that’s incurred on such transactions poses an extra value to them, additional lowering their revenue margins. Regardless that there’s a GST waiver, in concept, 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 providers to less-profitable places.

Inadequate liquidity administration help

BC brokers wrestle with the shortage of help for liquidity administration as a result of they need 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 function in scaling up the agent community. This has benefited new-age BCNMs in scaling up their companies in several 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 possible the reason for among the points that clients face whereas accessing CICO providers (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 publish on this collection, we unpack a conceptual framework known as the ‘agent success framework’. This framework is meant to help key decision-makers in figuring out the place the CICO enterprise may be made extra accessible for the client, and worthwhile for the brokers and community managers.

Click on right here to entry the Half I and Half III of the collection.

[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 based mostly on commissions unviable. Retrieved March 31, 2023, from

[3] With a fee of RS 15, RBI’s enterprise correspondents mannequin is perhaps 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 primary monetary providers to clients in areas the place financial institution branches are usually not obtainable.

[6] Balani, J. (2015, Might). Microsave India focus observe #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 in a position to supply entry to dependable CICO? . Retrieved from Dvara Analysis.


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


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

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