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Informist, Monday, Apr. 6, 2026

--RBI issues draft on amending branch authorisation directions for banks 

--RBI seeks comments on draft bank branch authorisation directions by May 5 

MUMBAI – The Reserve Bank of India Monday released draft directions aimed at improving the efficiency of business correspondents, individuals who are engaged by a bank to provide banking and other financial services on behalf of the bank. The central bank has proposed that the new directions take effect on Jul. 1 and has sought feedback on the draft guidelines by May 5.

"Business Correspondents have been functioning as critical enablers of last-mile access to financial services, particularly in respect of underserved, rural, and remote locations," the RBI said in a release. "Reserve Bank had set up a committee, consisting of officials from Reserve Bank, DFS (Department of Financial Services), IBA (Indian Banks' Association) and NABARD (National Bank for Agriculture and Rural Development), to comprehensively examine their operations and make suitable recommendations for enhancing their efficiency."

The draft amendment directions propose to define three types of delivery points: branch, business correspondent-banking outlet, and business correspondent-banking touchpoint. The directions also propose simplifying the eligibility criteria for engaging business correspondents and bringing uniformity in the business correspondents ecosystem with respect to payment of commission and remuneration, the RBI said.

The RBI has proposed that a bank's board review the operations of business correspondents at least once every six months. Banks (except payments banks), deposit-taking non-banking finance companies, and primary agricultural credit societies cannot be engaged as business correspondents, the RBI has proposed.

Business correspondents should be compensated for their services based on a remuneration structure comprising fixed and variable components, the RBI said. Business correspondents and sub-agents operating banking touchpoints will be eligible to receive only variable remuneration, the central bank has proposed.

"The fixed monthly remuneration structure shall be arrived at by the Indian Banks' Association (IBA) through a standing committee set up for the purpose and shall be devised in a way that is suitably benchmarked to an external indicator," the RBI said. "The variable remuneration shall also have an element of customer satisfaction and not merely be based on the volume of transactions."

Banks will be required to monitor the activities of business correspondents and sub-agents through their transaction monitoring systems on an ongoing basis, the RBI said. Banks will be responsible for the acts of their business correspondents, the central bank said.  End

Reported by Shubham Rana

Edited by Saji George Titus

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