Pradhan Mantri Jan Dhan Yojana (PMJDY) is now the world’s most successful financial inclusion scheme.  This blog highlights the supply-side findings (specifically focused on Bank Mitrs (BMs) or bank agents) of the final round of MicroSave’s PMJDY assessment (Wave III) conducted in December 2015. 
The BM network is the backbone of PMJDY scheme. The network of agents act as the arteries and veins of the Indian financial system that delivers technology-enabled financial services, at affordable cost, to otherwise inaccessible corners of India. The success or failure of the PMJDY scheme depends on the vibrancy of a network of more than 125,000 BMs spread across India. A typical BM is considered functional if he is available at the designated sub-service area location, equipped to serve transaction requests/queries of customers, earning a (sustainable) profit from operations, and has robust back-end support from link bank branches. This blog discusses these critical functional parameters of the BM network.
Are BMs available/accessible/transaction-ready?
Yes! PMJDY Wave III highlighted significant availability of BMs, i.e., BMs who are present at the stated location or could be traced to a nearby location. While 97% of the BMs were available, only 3% could not be traced, as they were neither present at their kiosk, nor could be contacted over the phone. Even the local residents could not identify/provide information about the latter. The survey highlights that 79% of the BMs are “transaction-ready”, i.e. BMs equipped to handle customers’ account opening/ withdrawal/deposit requests. BMs’ availability and their transaction-readiness has positively impacted customers’ trust of the PMJDY scheme. BMs were of the opinion that PMJDY scheme has led to greater women’s participation in financial inclusion. One BM from Jind district of Haryana says, “Many women save INR 50–500 (US$ 0.75–7.5) without their husbands knowing about it.” Our findings indicate that out of every three PMJDY customers opening a bank account for the first time, one is a woman. A BM from Bhadrak district of Odisha said “900 accounts out of 1,540 are of females. If it is convenient, we collect deposits from their houses.”
Does income from business match BM’s expectation?
No! There is a huge expectation mismatch between what a BM expects to earn (INR 13,000 (US$ 197) monthly) and what he actually earns (average monthly revenue/income is INR 4,692 (US$ 71)). At current income level, BMs are earning an average income of INR 188/day[1] (US$ 2.8), which is less than the income of an average MGNREGA worker, who earns INR 206 per dayday[2] (US$ 3). A BM from Ghazipur district of U.P. noted, “Our income is lesser than MGNREGA wages. I have received INR 3,500 (US$ 53) in the last 18 months. Can I sustain my family on this income?” BM profitability ranges between a monthly loss of INR 350 (US$ 5.3) to a monthly profit of INR 2,500 (US$ 37.7) depending on the type of commission model and investment made in the infrastructure.
BMs claim that the amount received as commission is not sufficient to cover operational costs, such as travel to link branches, stationery, rent, and connectivity. The fact is corroborated by MicroSave analysis, which reveals that an average BM incurs a monthly operational cost in the range of INR 2,600-3,300 (US$ 39-50). Additionally, BMs have no clarity on the commission structure. BMs receive a lump sum amount in their account, without any break-up to explain the commission paid to the agent. This leaves them unsure of the relationship between monthly transactions performed to the commission earned, and unable to keep track of their monthly earnings from the business. A few BMs also report not having received any commission for the last three to six months. The irregularity and low commission payment has direct impact on service to PMJDY customers due to increased BM dormancy/churn, and low level of investment (liquidity). 
BMs’ dormancy (i.e., BMs who have abandoned their role as a BM and have stopped offering financial services) stands at 10%.  At 10% dormancy level, it is estimated that a total of 12,595 BMs[4] across India. Further, an additional 2% BMs have stated that they plan to exit the business in the next two months, owing to inadequate commission, poor support from the bank or agent network manager, and lack of business potential. This may add another 2,519 BMs to the total dormant BM numbers in India and cut off approximately 2.4 million PMJDY customers from mainstream banking. In addition to this, PMJDY survey reveals that around 6% of the active BMs are not conducting any transactions and it is highly probable that they may become dormant if immediate steps are not taken to improve their business profitability.
If it’s a no-profit business, why BMs are still continuing the operations?
Surprisingly, despite challenges, most BMs continue with the business and hope that the situation will improve in future. A BM from Ferozpur, Punjab, noted: “The bank may recruit us as staff, if we continue to perform better.” The perception that work as a BC will lead to full-time job opportunity with the bank led many to join as agents. At times, we also observed banks taking undue advantage of this false expectation of BMs, by asking them to assist in their day-to-day activities. 
BMs also cite reasons such as better standing in society as a result of their BM status; and also feeling accountable to the customers for whom they opened accounts/from whom they have taken savings, as reasons for continuing in the role. A BM in Bhadrak district of Odisha stated, “I get a lot of respect wherever I go”. 
However, only 37% of the BMs surveyed have additional businesses/occupations (such as photocopy machines, general stores, and/or insurance agent, etc.), indicating that they are not solely dependent on the uncertain income from BM operations. This gives them an important cushion. Worldwide, the agent network surveys performed by MicroSave’s The Helix Institute are showing an increasing trend of agents to be “non-dedicated” – i.e. running the agency business alongside another core business. Even in Kenya, in 2014 64% of agents were non-dedicated – up from 54% a year earlier.
Is BM’s sustainability the only concern?
No! There are other issues as well!! A BM from Jind district in Haryana pointed out: “I have enrolled for the Rs 330 (US$ 5) insurance, but no amount has been deducted from my account. I am not aware where to approach if an accident were to happen?” The survey highlights that many BMs are unaware and untrained about the full benefits and process details, such as insurance premium deposit and claim settlement. BMs reported that they did not receive product details from link branches but, instead, gather information through advertorials in television and newspapers. They mentioned feeling helplessness in the face of customer queries, such as status of activation of an insurance policy, premium deduction, process and documentation of claim submission, etc. BMs noted that a major challenge that they face is the absence of proper documentation which should be received by a customer taking out an insurance policy. BMs reported providing the stub of the insurance form as ‘acknowledgement slip’ only if customers asked for it; otherwise, no proof/documentation was given to customers. 
And, finally, what about link branch support?
A BM from Ferozpur district of Punjab noted: “We are called Bank Mitrs, but link branches don’t accept us as one”. BM business and performance improves with better quality support from link bank branch staff. On a day-to-day basis, a BM needs regular support from bank branch staff for a variety of aspects of the business, such as account approval at the back-end, resolving technical challenges, connectivity-related issues pertaining to point of sale (POS), and liquidity management.  BMs with better branch support showed higher customer footfall. As one BM from Dadra & Nagar Haveli said, “If the branch manager is good, then everything is good”. Interestingly, only 63% of active BMs were satisfied with the support they got from staff at the link branch, while 18% BMs were dissatisfied.

MicroSave’s qualitative analysis reveals that, on an average, a bank branch managed 2 BMs and approximately 2,000 PMJDY customers. Assuming 10% of PMJDY customers approach the bank branch for their day-to-day non-financial /financial transaction – bank branches need an additional 34 man-hours to successfully address these additional customers. The lack of support that BMs received from branch staff can thus also be attributed to the bandwidth limitations prevalent in rural branches.


The Surveys: Background, Samples and a Technical Caveat

MicroSave conducted three rounds of PMJDY assessments (Waves I, II and III) from October 2014 to December 2015, to analyse the impact of and challenges associated with PMJDY, both for beneficiaries and channel partners. MicroSave conducted the study with funding support from the Bill & Melinda Gates Foundation (BMGF) and presented the findings to the Department of Financial Services, Ministry of Finance, Government of India.

It is important to note here that Wave III incorporated a nationally representative survey conducted with 1,627 BMs and 4,859 PMJDY account holders, in a total of 42 districts across 17 states and one Union Territory. The survey results of PMJDY Wave III are not strictly statistically comparable with PMJDY Wave I and II surveys, due to difference in sample frames. The comparisons presented in the blog are for the purpose of convenience and are indicative in nature.

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[1] Assuming BM works for 25 days in a month

[2] MGNREGA website:

[3] There are 125,956 BMs present across India:

[4]  On an average, a BM handles 949 PMJDY customers: PMJDY Wave III findings. Therefore 12,595 dormant BMs multiplied by 949 gives us a total of approximately 12 million PMJDY customers who are not being served

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