What changed
RBI has now formally allowed UCBs to offer PAN issuance services to customers through a tie-up with UTI Infrastructure and Technology Services Ltd. Only those UCBs classified as 'Financially Sound and Well Managed' as per the October 1, 2013 circular are eligible. Prior approval from the concerned Regional Office is mandatory before commencing the activity.
What it means for you
This opens a new fee-based service line for eligible UCBs, potentially enhancing customer stickiness and non-interest income. However, banks must be vigilant about application quality and turnaround times, as UTIITSL can impose penalties for errors or delays. The regulatory filter ensures only stronger UCBs take on this responsibility, reducing operational risk.
What you must do
- Verify your UCB's classification as 'Financially Sound and Well Managed' per the October 1, 2013 circular before proceeding.
- Obtain prior approval from your concerned RBI Regional Office before signing any agreement with UTIITSL.
- Establish robust internal processes to ensure complete, accurate, and timely forwarding of PAN applications to UTIITSL processing centres.
- Monitor compliance with all PSA-related responsibilities to avoid penalties from UTIITSL.
Who it affects
Primary (Urban) Co-operative Banks, UTI Infrastructure and Technology Services Ltd, Customers of eligible UCBs seeking PAN issuance services
Which UCBs are eligible to become PAN Service Agents?
Only those Primary (Urban) Co-operative Banks that are classified as 'Financially Sound and Well Managed' as per RBI circular UBD.CO.LS.(PCB).Cir.No.24/07.01.000/2013-14 dated October 1, 2013 are eligible.
What happens if a UCB makes errors in PAN applications?
UTIITSL may impose penalties on the UCB for violations such as delayed forwarding, incomplete applications, or discrepancies in documents. Banks must exercise due care to avoid such penalties.
Can a UCB start PSA activity without RBI approval?
No. Prior approval from the concerned Regional Office of RBI is mandatory, even if the bank has already signed an agreement with UTIITSL. The bank must approach the Regional Office to complete formalities.