RBI revamps business correspondent model to boost last mile delivery of financial services

Kolkata: The Reserve Bank of India (RBI) has revamped the business correspondent model by creating a new layer and suggesting uniformity in respect of payment to them to help strengthen the banking services ecosystem.

The central bank said there would be three types of delivery points to boost customer services and expand financial inclusion. There will be branches, business correspondent-banking outlet (BC-BO) and business correspondent-banking touchpoint (BC-BT), the RBI said in draft amendments published Monday.

"Business Correspondents have been functioning as critical enablers of last mile access to financial services, particularly in respect of underserved, rural, and remote locations," the central bank said.


The amendments are proposed based on recommendations by a committee, consisting of officials from the RBI, Department of Financial Services, Indian Banks' Association and the National Bank for Agriculture & Rural Development.

The RBI has sought public feedback on the draft norms by May 5.

Also Read | Small finance banks make it big on micro revival

The proposals said that BC-BO will be fixed-point service delivery units, operated by a BC or its sub-agent. They will offer services for a minimum four hours per day for at least five days in a week. They will offer most of the service a bank branch offers.

For BC-BTs, there will be no fixed time of service. Both BC-BO and BC-BT will work exclusively for a single bank.

RBI said BCs or BC sub-agents operating as banking outlets will have fixed and variable components in their remuneration while the BC-BTs will be entitled to only variable payments. RBI also mandated the Indian Banks’ Association (IBA) to create a structure for monthly remuneration, which would be benchmarked to an external indicator. The variable remuneration will have an element of customer satisfaction and not merely be based on the volume of transactions.

There will be no separate category of business facilitators, as they undertake functions similar to that of BCs. Existing BFs will be categorised as BC-BO or BC-BT by September 30.

RBI has also proposed simplifying the eligibility criteria for engaging BCs.

Also Read | Banks seek RBI clarity on forex hedge curbs, warn rules may hit genuine trade flows amid delays

The central bank told banks to carry out due diligence on BCs prior to their engagement. This will cover their market standing, financial strength, governance structure, cash handling ability and ability to implement technology solutions.

It may be noted that the total number of BC outlets in the villages declined to 13.11 lakh in FY25 from 15.48 lakh in FY24, as per the RBI’s Trend and Progress of Banking in India report.