The Hindu Business Line : Business correspondent norms

Banks can appoint Section 25 companies as business correspondents (BC) for financial inclusion, said the Reserve Bank of India, in a notice issued today.

The RBI said that these companies should be stand-alone entities. They should also be companies in which NBFCs, banks, telecom companies and other corporate entities or their holding companies do not have equity holdings in excess of 10 per cent. Whil e engaging Section 25 companies as BCs, banks will have to strictly adhere to the distance criterion of 15 kms or 5 kms, as applicable, between the place of business of the BC and the branch, the RBI said.

The RBI also said that in case the BC appointed by banks could appoint sub-agents at the grass-root level to render the service of a BC. The sub-agents of BCs should fulfil all relevant criteria stipulated for BCs and the BCs should carry out proper due diligence in respect of the sub-agent to take care of the reputational and other risks involved. Further, individuals appointed as BCscannot in turn appoint sub-agents, RBI said. –

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