Money & Banking

SBI sends alert over ‘reputation risk’ from business correspondent model

Our Bureau Chennai | Updated on March 20, 2011


A State Bank of India e-circular from the Corporate Centre in Mumbai and addressed to the Chief General Managers of all Circles has alerted the latter about a ‘reputation risk' to the bank from malpractices in the business correspondent/customer service point (BC/CSP)-model.

“This (behaviour) poses serious risk to the reputation of the bank and needs to be checked ab initio,” states e-Circular No. RABG/RB-AC-AC/18/2010-11 dated March 18, a copy of which is available with Business Line.


The circular informed the Circles that while conducting cash transactions at CSPs through deposit/withdrawal /remittances, a few CSPs have been found indulging in malpractices.

These ranged from asking for unauthorised money from customers over and above the bank's approved rates of charges for services rendered, particularly in remittances/tatkal transaction, which is in contravention to extant instructions.

The ‘gullible' customers at the CSPs are likely to be exploited in this manner, the circular noted. Chief General Managers of circles have been asked to depute suitable officials to a few select CSPs to get a first-hand experience of ‘what is happening at the ground level' and submit a report thereof by April 15.


While doing so, the Circular has gone on to specify a number of measures which the circles should implement forthwith in this regard. Due diligence needs to be exercised at the time of selection of BC/CSP. Specially authorised officials need to be involved in the process of selection of CSPs and while carrying out due diligence as applicable for BCs.

Dos and don'ts for customers should be displayed at the outlet while engaging BCs/CSPs at the outlet as also the structure of fees/charges to be borne by them for the same.

Activities of CSPs/BCs should be closely monitored by authorised officials, which include periodical site visits. Feedback should be requested from customers and properly analysed.


The circular called for audit of the CSP outlet by the Circle auditors even as they are engaged in the chore at the link branch. Training/handholding of CSPs/BCs needs to be taken up expeditiously.

Emphasising customer education and financial literacy, the circular felt the need for conducting awareness campaigns in villages where CSPs are functioning.

Opinion leaders need to be identified in the villages and contacts maintained with them in order to keep a tab on CSPs/BCs. Contact numbers of the link branch managers and other officials should be displayed in the CSP with an advice to customers to report any instance of overcharging/unauthorised charges by the CSPs, the circular said.

Published on March 20, 2011

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