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The Reserve Bank of India (RBI) has decided to make an assessment of the impact of the pandemic and resultant pan-India lockdown restrictions on Business Correspondents (BCs).
This is in view of the central bank receiving information that the BCs of some of the banks were largely inactive, thereby adversely affecting the delivery of financial services at the last mile.
The RBI has sought details from banks on the effect of lockdown restrictions on services/activities of BCs; cash management; and customer grievance at BC outlets, among others.
The central bank has underscored the importance of BC business, especially considering the present (pandemic) situation and the need to ensure availability of banking services to the masses.
BCs are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM. They provide ‘cash in - cash out’ transactions closer to the customer.
As per RBI data, the number of BCs in villages and urban locations as of March-end 2019 stood at 5,41,129 and 4,47,170, respectively.
Inputs sought from banks
The banking regulator has sought inputs on the effect of lockdown restrictions on services/activities of BCs vis-a-vis business (transactions, account opening and other activities); migrant labourers and joblessness (impact on urban BCs); BC business in rural areas; and movement of BCs during the lockdown.
Under cash management, the central bank wants to know whether there is adequate supply of cash and the status of insurance of cash in transit and cash at hand.
When it comes to customer grievance at a BC outlet, the RBI wants to gauge the incidence of failed transactions and reversal thereof, and incidence of levying of charges by BC agents.
The RBI will closely look at the criteria adopted by banks for classifying BCs as inactive and redressal of technical issues.
The central bank also wants to assess the measures adopted by banks for ensuring viability and sustainability of BCs.
BCs are permitted to perform a variety of activities which include identification of borrowers; collection and preliminary processing of loan applications, including verification of primary information/data; creating awareness about savings and other products and education and advice on managing money and debt counselling; post-sanction monitoring; and follow-up for recovery.
Their scope of activities also include disbursal of small-value credit; recovery of principal / collection of interest; collection of small value deposits; sale of micro insurance/ mutual fund products/ pension products/ other third-party products; and receipt and delivery of small-value remittances/ other payment instruments.
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