Introduction
In an era of heightened competition, thin profit margins and cost constraints, establishment of conventional bank branches in all locations cannot be a viable proposition. It is, therefore, imperative to explore the possibilities of other cost-effective delivery mechanisms to reach out to remote locations and satisfy the financial needs of client/s at an affordable cost. The concept of Business Correspondent (BC) has been introduced in the banking sector with this end in mind. This is an efficient and effective tool for implementation of Financial Inclusion program of the Government of India. Business Correspondents (BCs) and Business Facilitators are representatives appointed by Bank to act as the agent and provide banking services in remote locations where the Bank does not have a presence in order to promote financial inclusion
Objective
Purpose
The following Business Correspondent models are envisaged:
Eligibility Criterion for the appointment of Business Correspondents and Business Facilitators
The bank can engage with the following individuals and/or entities as BC/BF:
Selection Criterion and Procedure for Appointing BCs/BFs
Scope of Activities
The activities to be undertaken by the BCs/BFs would be within the normal course of banking business. BC’s can be permitted to carry out regular transactions for customers on behalf of the Bank.
The scope of activities of the BC/BF may include the following:
Interoperability of BCs/BFs
Bank will permit interoperability at the retail outlets or sub-agents of BCs (i.e., at the point of customer interface) subject to the following conditions:
Distance Criterion for setting up BC/BF
KYC:
While BC may collect the proof of identity/proof of address documents from the potential customers for on boarding from the field, the responsibility for ensuring KYC and AML compliance will rest with the Bank.
Agreements:
While drawing up agreements with BCs, bank will adhere to instructions contained in the guidelines issued by RBI on managing risks and code of conduct in outsourcing of financial services. The terms andconditions that governing the contract between the Bank and service provider, should be carefully defined in written agreements, and must be vetted by bank's legal counsel/Team on their legal effect and enforceability. Such agreement should address the risks and risk mitigation strategies. The agreement should be sufficiently flexible to allow the bank to retain an appropriate level of control overthe outsourcing and the right to intervene with appropriate measures to meet legal and regulatory obligations.
The contract/agreement must incorporate the following:
Commission/Fee Structure
Bank shall pay reasonable commission/fee to the BC/BF. The rate and quantum ofthe commission/fee may be reviewed periodically as per the agreement. Bank will aim to devise appropriate commission/fee structure for corporate and individual BCs basis the following parameters:
Monitoring and Risk Management
As Bank runs the reputational risk while managing the BC, Head Office and branches will closely watch and monitor the activities of BC engaged by them. Bank will ensure the following:
Customer Service
Customer satisfaction is of supreme importance while rendering Banking Services. The Bank would takeall steps to protect the interests of the customers and to ensure fair, transparent, and prompt delivery of services through BC/BF Channel and all the services rendered by BCs and BFs shall be covered under customer service policy of the Bank.
Policy Review and Updates
This Board approved policy will be reviewed as and when required or at least on an annual basis for incorporating changes in appointing BCs and BFs and regulatory updates, if any.
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