Wednesday, July 15, 2015

RBI allows Banks to appoint NBFCs as Biz Correspondents

To hasten financial inclusion, the Reserve Bank has allowed commercial banks to appoint non-
banking financial companies (NBFCs) as business correspondents (BCs). Only non- deposit-taking NBFCs (NBFC-ND) will be eligible to act as banks’ BCs. It also did away with a rule that made it compulsory for banks to attach each outlet and sub-agent of a BC to a specific branch. Earlier, banks had to assign BC outlets to a branch within 30 km in case of semi-urban and rural areas and five km for metropolitan regions. This was aimed at ensuring adequate supervision for BCs. Banks have to ensure that there is no co- mingling of bank funds and those of the NBFC-N D. Banks should also ensure that the NBFC- ND does not adopt any restrictive practices such as offering savings or remittance functions only to its own customers, and forced bundling of services offered by the NBFC-ND and the bank.

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