Summary of this article
RBI proposes three-tier BC structure for service delivery
Standardised pay model with fixed and variable components
BF category removed, stricter due diligence for onboarding
The Reserve Bank of India (RBI) has suggested a significant reform in the business correspondent (BC) model to improve the delivery of banking services in the last mile. The proposed guidelines suggest a standardisation in compensation for better efficiency and accountability.
According to the proposal, RBI has described three types of service delivery points. These are bank branches, business correspondent-banking outlets (BC-BOs), and business correspondent-banking touchpoints (BC-BTs). The relocation is geared towards the organisation of service provision especially in the rural and remote regions where accessibility to formal banking is minimal.
BCs have played a significant role in providing financial services to underserved groups. They allow in the conduct of simple banking operations, direct benefit payments, and facilitate digital payments in areas where physical branches might not be possible. Enhancement of this network is regarded as a key to enhancing financial inclusion.
Three-level Service Delivery Structure
The given framework distinguishes between fixed service points and flexible ones. BC-BOs will be fixed location stores that have specific working hours. These departments should operate at least four hours a day and at least five days a week. They aim to provide a broad variety of services in a bank branch.
Conversely, BC-BTs will be more flexible and will not have to work in fixed hours. The model will be applied in regions where demand might be erratic or sporadic. BC-BOs and BC-BTs will be permitted to work only with one bank, and it is likely to enhance monitoring and consistency of the services.
Standardised Compensation Structure
There are also changes in the compensation of BCs proposed by the RBI. BC-BOs will have a mix of variable and fixed salaries, whereas BC-BTs will be paid by all variable salaries.
In order to provide uniformity, RBI has requested the Indian Banks Association (IBA) to make a structure on monthly remuneration. The fixed element should be connected with an external benchmark, which will offer a more stable income base.
The variable component will extend past the levels of transactions and will comprise customer satisfaction measures. This is likely to promote higher quality of service and customer interaction as opposed to basing on the quantity of transactions made.
Removal Of BF Category
The draft guidelines also suggest the elimination of the individual category of business facilitators (BFs) because their roles are mostly similar to those of BCs. By September 30, 2026, the current BFs will be redesignated into either BC-BOs or BC-BTs. Such consolidation is likely to streamline the structure of the entire system and eliminate duplication in the system.
Easier Entry With Stronger Checks
RBI has also suggested the streamlining of the eligibility rules to onboard BCs to increase the BC network. Nevertheless, banks will not be spared in conducting due diligence prior to engagement. This will involve measurement of aspects, such as market reputation, financial power, governance, cash handling capabilities and technology capability. These measures are aimed at making sure that BCs are ready to give good and safe banking services.
Background And Way Forward
The draft framework is based on recommendations from a committee comprising representatives from the RBI, the Department of Financial Services (DFS), IBA and National Bank of Agriculture and Rural Development (NABARD).
RBI has also sought public contributions on the proposals until May 5, after which the final guidelines will be announced.
Data from RBI has shown that the outlet of BC in villages decreased to 1.31 million in FY25 compared to 1.54 million in FY24. The updated model is designed to help fill these gaps by enhancing organisation, motivation, and control over the BC ecosystem.
