What changed
RBI has formally advised banks to consider engaging Business Correspondents and Cash-in-Transit entities for currency distribution, following a September 2, 2013 circular that expanded BC scope to include cash handling. This operational shift allows banks to leverage non-branch channels for note and coin distribution.
What it means for you
Banks can now offload cash distribution to BCs and CIT firms, reducing branch congestion and extending reach to underserved areas. This may lower operational costs and improve service efficiency, but requires robust oversight to ensure security and compliance with currency management norms.
What you must do
- Review your current BC agreements to include currency distribution as a permitted activity.
- Engage with CIT entities to formalize last-mile cash delivery arrangements.
- Update internal policies and training for BCs on secure handling of banknotes and coins.
- Ensure compliance with RBI's September 2, 2013 circular on BC activities.
- Monitor and report cash distribution performance to RBI as required.
Who it affects
All Scheduled Commercial Banks including RRBs, Business Correspondents, Cash-in-Transit entities, Bank customers in remote areas
Can we use any BC for cash distribution?
Yes, but only if your BC agreement is updated to include currency management functions as permitted by RBI's September 2, 2013 circular.
Do we need separate RBI approval for engaging CIT entities?
No separate approval is needed for this purpose, but you must ensure CIT entities comply with existing security and regulatory guidelines.