How can community shops become a growing woe for Indian banks?

They perform money transfer, deposits, and withdrawals largely for the low-income segment.

Bloomberg reports that community shops in India - from small watch shops, tailors and pharmacies - are turning to new sidelines such as money transfer, deposits, and withdrawals as banks and digital alternatives are increasingly unable to fulfil this function against a backdrop of unequal access to bank outlets and low financial literacy levels. 

And business is booming since these local shops are well-placed to address a historical pain point due to their strategic location at the heart of the community network and serve urgent money transfer needs such as those for medical emergencies. Shopowners are even earning a couple of million rupees each day with this as a lucrative sideline.

In-store cash points “stand a better chance at bringing the people used to cash transactions into the folds of formal banking and digital channels,” said Astha Kapoor, a consultant advocating for financial inclusion.

Here’s more from Bloomberg: 

Photo from flowcomm - Pharmacy, Gangtok, India, CC BY 2.0