India has added hundreds of millions of bank account holders over the past decade. Bank deposits rose dramatically between FY05 and FY25, from Rs 18.4 lakh crore to Rs 241.5 lakh crore (Source:ET), indicating a robust expansion of credit over time. So now a more interesting question isn’t who has an account and where they actually use it.
For a large share of the population, the answer isn’t a branch or an app. It’s the general store around the corner, the mobile recharge counter at the market, the familiar face behind a small desk equipped with a micro-ATM. Digital payment systems are widely available and real-time transfers have become routine, but the last mile of banking i.e., the point where money actually moves in and out of everyday life, is increasingly being handled by local retail outlets embedded in neighbourhood markets.
This layer operates quietly, but at a remarkable scale. And for many users, it is the most immediate, most trusted point of interaction with the formal financial system.
Distribution through existing retail networks
Extending banking services into smaller towns has always required a different approach to distribution. Branch infrastructure involves fixed costs, real estate, staffing, and compliance, which are not always aligned with the transaction volumes seen in low-density markets.
Retail-led networks work within an existing footprint. Kirana stores, mobile recharge outlets, and small service counters are equipped with micro-ATM devices and Aadhaar-enabled systems to facilitate transactions such as cash withdrawals, balance enquiries, and domestic remittances.
The model builds on what is already present in the market. Retailers operate within walking distance for most customers, maintain longer working hours, and are part of daily economic activity. Adding financial services to these outlets expands access without requiring new physical infrastructure.
Platforms operating in this space have scaled large merchant networks across semi-urban and rural regions, enabling these outlets to function as access points connected to regulated banking systems.
Transaction flow and operating economics
The model is structured around transaction-led incentives. Retail partners earn commissions on each transaction, like withdrawals, transfers and bill payments, creating a direct link between activity and income.
For retailers, this adds a supplementary revenue stream. In many cases, it also increases customer visits, as financial transactions are often combined with routine purchases. For financial institutions and service providers, the model shifts distribution costs from fixed investments to variable expenses tied to usage.
Transaction volumes have increased steadily in recent years, supported by the wider adoption of digital payment rails. The business correspondent and merchant outlet ecosystem crossed ₹140 billion in size by FY25, reflecting sustained growth in last-mile service delivery.
At the same time, performance varies across locations. High-traffic outlets tend to generate consistent transaction flows, while lower-activity locations may see irregular usage. This variation is inherent to a network that is spread across diverse geographies and customer segments.
Cash handling remains a central operational requirement. Retail partners need to maintain adequate liquidity to service withdrawals. Managing this balance between incoming digital transactions and outgoing cash demand is a continuous process, particularly during peak transaction periods.
Usage patterns and local context
The uptake of assisted financial services is closely linked to how users engage with banking in everyday situations. Local access points reduce the time and effort involved in routine transactions. Consider a migrant worker’s family in a small town waiting for a remittance. A nearby outlet means funds transferred digitally can be accessed the same day, without travel, without waiting, and with someone familiar on the other side of the counter. For households managing frequent cash flows, this proximity supports more regular interaction with formal channels.
The presence of a familiar intermediary also shapes usage. Transactions conducted in person offer immediate confirmation and support when needed, especially for users who do not rely entirely on mobile interfaces. Remittance flows illustrate this clearly. Funds transferred digitally can be accessed through local outlets soon after they are credited, supporting timely use for recurring expenses.
Repeated transactions through these channels gradually build familiarity and confidence with formal financial systems. India’s banking infrastructure now operates through a combination of branches, digital platforms, and retail-led access points, each handling different aspects of financial activity. As this model matures, the shop counter is becoming a permanent fixture in India’s financial architecture, one that could define how the next hundred million users experience banking for the first time.
Attributed to: Amit Nigam, Executive Director, CEO of FindiBANKIT
