After years of rapid digitalization, even coming across someone without a bank account has become an extremely rare sight for almost anyone today. However, this was far from reality for rural India just a decade ago, where, until 2014, only 35% of adults had an account with a financial institution, leaving millions excluded from formal banking.

This severe gap was not merely impractical, but resulted in a perpetual cycle of debt for many. Local moneylenders in rural India often charge high interest rates to exploit villagers with little to no knowledge of or access to formal credit and banking.

The Launch of BC Sakhi in India

2020 marked the start of something that completely reshaped a harsh reality for many rural Indians. Over the past five years, the Bank Correspondent (BC) Sakhi initiative has been dedicated to bridging this gap that leads to exploitation, going door-to-door to bring India closer to true financial freedom.

Launched by the Indian government under the National Rural Livelihoods Mission (NRLM), the BC Sakhi (friend) initiative aims to appoint at least one female banking correspondent for every Gram Panchayat (village council). Women from self-help groups are recruited and provided with extensive vocational training to be on the frontlines of financial inclusion, interacting with villagers to transform financial management.

These women take on roles ranging from raising financial literacy to opening bank accounts and linking villagers with credible institutions that offer credit, savings and government benefit transfers.

A Community-Centered Approach

The initiative adopts a tailored approach to overcome connectivity barriers—historically a major reason for access gaps in villages. Women within the community, often from underprivileged backgrounds and needing employment, are brought into the program. This enables them to secure a stable income to support their families while gaining vocational skills that help them advance in their careers.

Technology as a Tool for Inclusion

A door-to-door approach, while fruitful, created challenges of efficiency that needed to be resolved to speed up progress for villagers. As of 2022, only 37% of rural Indians were aware of or claimed to have used digital banking. Reflecting on this trend, the initiative tapped into an underutilized resource with great potential to transform banking for rural Indians—technology. Digital tools to accelerate adoption include: 

1. Aadhaar-enabled payment systems: Bank accounts were linked to government IDs, allowing the use of biometrics to approve deposits and withdrawals.
2. Micro-ATMs: To eliminate the need for a traditional branch, low-cost handheld devices enabled women correspondents to carry out common transactions at the doorstep, including extending small loans to informal workers.

Banking on Women’s Empowerment

While serving the rural population, the initiative also empowers rural women in all aspects of life. By stepping into the role of a BC Sakhis, women gain access to:

1. Income Generation: By earning commissions on transactions and service fees, BC Sakhis can generate supplemental income.
2. Skill Development: All correspondents receive free or heavily subsidized training in digital tools, financial services and soft skills such as customer service and communication.
3. Social Status: While acting as facilitators between villagers and banks, Sakhis gain confidence and respect within their communities. Government-led impact studies have shown increased confidence levels among women who work with the initiative.

The initiative has already trained more than 50,000 women to serve as links between rural Indians and formal banking. By adopting a community-centered approach, the program has contributed to positive change toward reducing both financial insecurity and social marginalization of women. As more villages continue to be linked to correspondents under the scheme, BC Sakhi in India is set to remain a cornerstone of the nation’s journey to complete financial inclusion.

– Anahadhbir Singh

Anahadhbir is based in Toronto, Canada and focuses on Good News for The Borgen Project.

Photo: Unsplash