Women in rural India are recognising the potential of financial freedom offered by the role of Banking Correspondents such as MFIs and NGOs. Each facilitator connects with numerous people on behalf of the bank and create financial awareness about savings and other products, identify potential customers, collect and verify loan applications, monitor repayments and follow up for recovery.

According to the RBI 2009 report, only 30,000 out of the 600,000 population centers in India have commercial bank branches. Less than 50% of the population has bank accounts. Only about 10% of the population has life insurance, less than 1% has other types of insurance. This accounts for a huge opportunity.

Indian banks, especially the public sector banks have made substantial efforts to tap the country's rural population, but it has largely been a costly and largely unsuccessful endeavour. Out of 50 public sector and private sector banks, 26 have therefore appointed BCs, through which eight million no-frills accounts have been opened as of March 31, 2009. Using BCs is gaining popularity, with the RBI recently adding six more types of correspondents including shop owners and public call centre operators to the existing list of BCs.

Reaching rural customers has many challenges, the main one being spreading financial education. Also setting up a banking infrastructure is costly, and requires a number of supporting services and infrastructure. The IUD initiative is considered one such, which will enable identification of depositors much faster.

But for banks the issue is not how to generate more accounts but rather how to ensure these accounts bring in revenue. The BC structure currently operates at a loss, and banks are unwilling to commit heavily unless they see returns soon.