RBI permits banks to engage Business facilitators

Mumbai, Apr 24 (UNI) The Reserve bank of India today permitted banks to engage Business Facilitators (BFs) depending their comfort level and after taking adequate precautions and conducting proper due diligence.

In a notification here, the Apex bank said in the light of the announcement made by Finance Minister P Chidambaram in his 2008-09 budget, it had been decided to permit banks to engage retired bank employees, ex-servicemen and retired government employees as Business Correspondents (BCs) with immediate effect, in addition to the entities already permitted, subject to appropriate due diligence.

While appointing such individuals as BCs, banks must ensure that these individuals are permanent residents of the area in which they propose to operate as BCs and also institute additional safeguards as may be considered appropriate to minimise agency risk.

Too ensuring adequate supervision over the operations and activities of the BCs by banks, it has been decided that every BC would be attached to and be under the oversight of a specific bank branch to be designated as the base branch. The distance between the place of business of a BC and the base branch should not exceed 15 kms in rural, semi-urban and urban areas. In metropolitan centres, the distance could be upto 5 kms.

The Central bank said in the context of scaling up of BF/BC model, which was a huge challenge given the size of the country, banks should bring to the notice of RBI any important issues to facilitate taking prompt corrective steps. The implementation of the BF/BC model should be monitored closely by controlling authorities of banks, who should specifically look into the functioning of BFs/BCs, during the course of their periodical visits to the branches.

Further, banks should also put in place an institutionalized system for periodically reviewing the implementation of the BF/BC model at the Board level.

UNI VK SR AG1707