As a move to promote financial inclusion, Reserve Bank of India has given permission to corporates and post offices to act as business correspondents (BCs). However, NBFCs have not been permitted for the same.
"Taking into consideration the pros and cons and based on the feedback received from various quarters, it has been decided to permit banks to engage companies registered under the Indian Companies Act, 1956, excluding NBFCs, as BCs," the RBI said in a revised guidelines.
RBI had issued a discussion paper last month about inclusion of 'for profit' companies as business correspondents for financial inclusion and had asked for feedback.
RBI had supported the appointment of corporates for this purpose as they would bring in larger resources, higher organizational strength and the financial backing needed for a large network of BCs, besides providing financial security to the bank. "Failure of large companies as BCs would mean a reputation risk to the company and endanger its substantive business. As such, the companies could be relied upon to ensure that their agents do not jeopardise their reputation," it added.
ICICI Bank's chief executive Chanda Kochhar appreciated the move saying that "The move to allow for-profit companies with a widespread retail network to act as business correspondents is a path-breaking and welcome development."