The Reserve Bank of India (RBI) on Monday proposed a comprehensive restructuring of the Business Correspondent (BC) framework, introducing a differentiated structure for BC outlets, tightening governance norms and formalising remuneration standards to strengthen financial inclusion and oversight. The amendments, once finalised, will come into force from July 1. The RBI has invited comments on the draft by May 5.
The central bank had set up a committee comprising officials from the RBI, the Department of Financial Services, the Indian Banks’ Association (IBA) and NABARD to review BC operations and recommend measures to enhance efficiency.
The draft proposes to define three types of delivery points which are branch, Business Correspondent- Banking Outlet (BC-BO) and Business Correspondent- Banking Touchpoint (BC-BT).
BC-BO to function as a fixed service point
A BC-BO will function as a fixed-point service unit, operating at least four hours a day for five days a week and working exclusively for one bank. Such outlets will be treated as banking outlets for regulatory purposes and will count towards classification of a centre as banked. BC-BTs will offer limited services such as small-value transactions and remittances with flexible hours.
The draft removes the separate category of Business Facilitators, requiring existing entities to transition to the new structure by September 30. It also revises the definition of an “unbanked rural centre” to include centres without a core banking solution-enabled branch or BC-BO.
What did the draft propose?
The draft proposed that boards must approve BC engagement policies and review operations at least once every six months. It also said that banks would remain fully responsible for the acts of BCs and their sub-agents.
The framework also proposed a structured remuneration model. BC-BOs would receive fixed and variable pay, while BC-BTs would be eligible only for variable remuneration. The IBA will prescribe minimum fixed pay, with variable compensation linked to transaction volumes and customer satisfaction.
All BC transactions must be conducted online and integrated with core banking systems, with offline transactions allowed only during temporary disruptions and reconciled the same day. Banks must ensure adequate cash management, risk monitoring and consumer protection safeguards, including display of grievance redressal details and Ombudsman information at BC outlets.