What changed
RBI has allowed financially sound and well-managed (FSWM) Primary Urban Co-operative Banks (UCBs) to offer doorstep banking services without prior approval, in terms of Section 23 of the Banking Regulation Act, 1949. Non-FSWM UCBs must seek prior approval from the concerned Regional Office of the Department of Supervision. Eligible UCBs can now formulate a board-approved scheme for doorstep services, including cash handling, instrument pickup, and KYC collection.
What it means for you
This move expands customer convenience for UCBs, allowing them to compete with larger banks by offering doorstep services. Banks must ensure robust risk management, especially for cash handling and agent engagement, to avoid fraud and disputes. The half-yearly board review in the first year ensures close monitoring of operational risks.
What you must do
- Assess your UCB's FSWM status to determine if prior approval is needed for doorstep banking.
- Formulate a board-approved scheme detailing services, delivery modes (employees/agents), and cash limits.
- Implement risk management measures, including customer agreements limiting liability for service failures.
- Consider educating employees and agents to detect forged/mutilated notes during cash pickup.
- Review the scheme half-yearly in the first year and annually thereafter.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), Customers of UCBs (individuals/natural persons), Agents engaged by UCBs for doorstep services
Which UCBs can offer doorstep banking without prior RBI approval?
Only financially sound and well-managed (FSWM) UCBs can offer these services voluntarily without prior approval. Non-FSWM UCBs must seek approval from the RBI's Regional Office of Department of Supervision.
What services are covered under doorstep banking for UCBs?
Services include pickup of cash and instruments against receipt, delivery of demand drafts and cash against account withdrawal, submission of KYC documents, and life certificates. Cash must be credited to the customer's account on the same or next working day.
What are the key risk management requirements for doorstep banking?
Banks must set cash limits for employees/agents and customers, ensure customer agreements limit liability for service failures beyond bank control, and treat doorstep transactions with same liability as branch transactions. Agents must comply with outsourcing guidelines from RBI circular dated June 28, 2021.