What changed
RBI expanded the list of eligible Business Correspondents to include retired bank employees, ex-servicemen, and retired government employees, subject to due diligence. It also mandated that every BC be attached to a specific base branch, with distance limits of 15 km in rural, semi-urban, and urban areas, and 5 km in metropolitan centres, with DCC/SLBC approval for relaxations.
What it means for you
Banks can now tap into a trusted pool of retired personnel to extend banking services in under-banked areas, reducing agency risk. The distance cap ensures closer oversight by base branches, but banks must seek DCC/SLBC approval for exceptions, adding a layer of compliance. This supports financial inclusion goals while maintaining control over BC operations.
What you must do
- Update BC engagement policies to include retired bank employees, ex-servicemen, and retired government employees as eligible BCs.
- Conduct due diligence and ensure BCs are permanent residents of their operating area.
- Assign each BC to a designated base branch and enforce distance limits: 15 km in rural/semi-urban/urban, 5 km in metro.
- For existing BCs beyond distance limits, inform DCC/SLBC and conform within six months or seek specific approval.
- Institutionalize board-level reviews and periodic branch visits to monitor BC/BF model implementation.
Who it affects
All Scheduled Commercial Banks including RRBs and Local Area Banks, Business Correspondents and Business Facilitators, Bank branch managers and controlling authorities, District Consultative Committees and State Level Bankers' Committees
Who are the new categories allowed as Business Correspondents?
Retired bank employees, ex-servicemen, and retired government employees can now be engaged as BCs, in addition to previously permitted entities, subject to due diligence.
What are the distance limits between a BC and its base branch?
The distance should not exceed 15 km in rural, semi-urban, and urban areas, and 5 km in metropolitan centres. Exceptions require DCC or SLBC approval.
What should banks do if existing BCs are beyond the distance limits?
Banks must inform the DCC/SLBC and take steps to conform within six months, unless specific approval is obtained from the DCC/SLBC.