RBI permits banks to engage BCs for service extention

Mumbai, Aug 27 (UNI) The Reserve Bank of India today said banks can engage registered companies as Business Correspondents (BCs) in order to boost up the financial inclusion by extending their banking services at the grass-root level.

In a notification addressed to all the scheduled commercial banks including RRBs, the apex bank said it has been decided that the banks can duly appoint BCs from registered stand-alone entities or holding companies, under Section 25, which includes NBFCs, banks and telecom companies.

It further said that in case duly appointed BCs of banks desire to appoint sub-agents at the grass-root level to render the services of a BC, banks have to ensure that the sub-agents of BCs fulfill all relevant criteria stipulated for BCs in the guidelines.

''The BC appointed by them carries out proper due diligence in respect of the sub-agent to take care of the reputational and other risks involved,'' RBI said.

Further, while engaging companies as BCs, banks will have to strictly adhere to the distance criterion of 15 kms/five kms, as applicable, between the place of business of the BC and the branch, the apex bank notified.

However, where individuals under the permitted categories have been appointed as BCs, they cannot in turn appoint sub-agents, it added.

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