The Reserve Bank of India (RBI) has proposed a major overhaul of its business correspondent framework, introducing a two-category structure aimed at improving last-mile banking services and strengthening financial inclusion across India.

Key Highlights

• RBI introduces two-tier BC model to improve financial inclusion, accountability, and standardized banking services nationwide.
• New rules mandate stricter governance, due diligence, real-time monitoring, and phased transition by September 2026.

Under the draft guidelines, banking correspondents will be classified into Business Correspondent–Banking Outlets (BC-BOs) and Business Correspondent–Banking Touchpoints (BC-BTs), as part of the central bank’s broader strategy to enhance service delivery, ensure accountability, and standardize operations in rural and underserved regions. Business correspondents are already considered critical for extending banking services to unbanked and remote areas, acting as an extended arm of bank branches.

Under the proposed structure, BC-Banking Outlets (BC-BOs) will function as fixed-point service units, operating for a minimum of four hours daily and at least five days a week. These outlets will offer a wide range of banking services similar to traditional bank branches, including account opening and KYC updates, cash deposits and withdrawals, fund transfers, bill payments, and small credit disbursement along with financial product sales. They will also be recognized as official banking outlets, helping expand the formal banking network in remote areas.

In contrast, BC-Banking Touchpoints (BC-BTs) will provide limited and flexible services, primarily focused on small-value transactions and remittances, without fixed working hours and with a narrower scope of operations.

The draft guidelines also propose several key reforms to improve the efficiency and governance of the BC ecosystem. These include phasing out the existing Business Facilitator model by merging it into the new structure by September 30, 2026, introducing a uniform remuneration system where BC-BOs receive both fixed and variable pay while BC-BTs are compensated through performance-linked incentives, and strengthening governance through board-approved policies and mandatory reviews every six months.

Banks will also be required to carry out enhanced due diligence before appointing BCs, assessing their financial strength, governance standards, and technological capabilities, while ensuring real-time monitoring of transactions through integration with core banking systems.

The proposal by the RBI aims to expand banking access in rural and underbanked areas, where business correspondents play a crucial role in delivering essential financial services. With over 16 lakh BCs currently operating across India, the new business correspondent framework seeks to bring consistency, efficiency, and better customer protection to the ecosystem.

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The draft guidelines are open for public feedback until May 2026, with implementation proposed from July 1, 2026, and a transition deadline for existing entities set for September 30, 2026.