What changed
RBI accepted the Working Group's recommendations with modifications, adding six new categories of entities eligible to act as BCs: individual kirana/medical/fair price shop owners, PCO operators, agents of small savings/insurance schemes, petrol pump owners, retired teachers, and authorized SHG functionaries. Banks are now permitted to collect service charges from customers for BC-delivered services, subject to board-approved policy and transparency norms.
What it means for you
This expansion significantly broadens the BC network, enabling banks to reach underserved areas more effectively. Banks must conduct due diligence on new BCs, ensure they are local residents, and implement ICT security measures. The ability to charge service fees helps make the BC model financially viable, but banks must ensure charges are fair and transparent to avoid regulatory action.
What you must do
- Update your BC appointment policy to include the newly permitted entities and ensure board approval for service charge structures.
- Conduct thorough due diligence on all new BCs, verifying local residency and implementing ICT-based authentication and security measures.
- Submit the board-approved policy on service charges to the respective RBI department (DBOD for SCBs/LABs, RPCD for RRBs).
- Monitor customer complaints regarding BC service charges and ensure transparency to avoid penalties for unfair practices.
Who it affects
All commercial banks including RRBs and LABs, Business Correspondents and their networks, Customers in unbanked and underserved areas
Can banks now charge customers for services delivered through BCs?
Yes, banks are permitted to collect reasonable service charges from customers for BC-delivered services, but only under a board-approved policy that ensures transparency and fairness. RBI will view any unfair practices seriously.
What due diligence is required for new BC entities like kirana shop owners?
Banks must ensure these individuals are residents of the area where they will operate, conduct suitable due diligence to minimize agency risks, and adopt ICT solutions for proper authentication and security.
Are there special provisions for BCs in the North Eastern Region?
Yes, for the North Eastern Region, local organizations not covered by standard RBI guidelines can be appointed as BCs if recommended by the DCC and approved by the RBI Regional Office after due diligence.