What changed
Previously, only individuals, NGOs, MFIs, cooperatives, and post offices could act as BCs. Now, companies registered under the Companies Act, 1956 (excluding NBFCs) are also eligible. The revised guidelines also require banks to update their BC engagement policies with board approval.
What it means for you
Banks can leverage corporate retail networks to deepen financial inclusion, especially in underserved areas. However, banks remain fully liable for BC actions, so robust due diligence and legal agreements are critical. This opens new channels for last-mile delivery of savings, credit, and insurance products.
What you must do
- Update your board-approved BC engagement policy to include for-profit companies (excluding NBFCs).
- Conduct enhanced due diligence on new BC entities covering reputation, financial soundness, governance, cash handling, and tech capability.
- Ensure written agreements with BCs are legally vetted and comply with RBI's 2006 outsourcing guidelines.
- Implement monitoring mechanisms to ensure BC retail outlets represent only one bank at the customer interface.
Who it affects
All scheduled commercial banks including RRBs and LABs, Existing and prospective Business Correspondents, Customers in unbanked and underbanked areas
Can NBFCs be engaged as BCs under this circular?
No, NBFCs are explicitly excluded from the list of eligible entities. Only companies registered under the Companies Act, 1956 that are not NBFCs can be engaged.
What activities can a BC perform under the revised guidelines?
BCs can identify borrowers, process loan applications, disburse small-value credit, collect deposits, sell micro-insurance and mutual fund products, and promote SHGs, among other activities listed in the annex.
Is a BC allowed to work for multiple banks?
Yes, a BC can serve more than one bank, but at the customer interface, each retail outlet or sub-agent must represent and provide services of only one bank.