Business Correspondents (BCs) may find some succour in RBI’s proposed guidelines relating to services provided by them to banks. Banks may put in place a mechanism for progressive reduction in pre-funding (security deposit) requirements for BCs providing banking services on their behalf in the hinterland.
However, this move does not meet BCs’ primary request for reducing the security deposit requirement upfront. BCs function as critical enablers of last-mile access to financial services, particularly in respect of underserved, rural and remote locations.
As per the draft ‘Reserve Bank of India (Branch Authorisation) Amendment Directions, 2026’, issued by the RBI on April 6, 2026, banks may include a provision for placing suitable transaction limits in their policy relating to transactions put through BCs. Further, they may also give effect to a mechanism for progressive reduction in pre-funding requirements as an incentive mechanism based on business relationship, quality of customer service and service to under-banked areas.
Also, banks may ensure that the benefit of progressive reduction in pre-funding requirements for BCs is passed on to BC sub-agents.
BCs voice concern
Players in the BC industry voiced concerns that the Indian Banks’ Association (IBA) has stipulated a high amount of security deposit of ₹50 lakh per 1,000 customer service points/CSPs operated by BCs, with proportional increase thereafter. The aforementioned stipulation is in sharp contrast to the security deposit norm of ₹10 lakh per 1,000 CSPs (or ₹1,000 per CSP) that the State Bank of India (SBI) and few other banks have been following.
This blanket escalation in security deposit creates unsustainable financial burden, especially for small, medium and emerging corporate BCs (CBCs), leading to potential exclusion of capable players from the ecosystem, the players said.
Dharanidhar Tripathy, CEO, Business Correspondent Resource Council, emphasised that the historical BC frameworkallowed a bank-wise flexible range of ₹1,000-₹2,500 per CSP, which respected institutional risk policies and local operating considerations.
Although there is a blanket indemnity given by CBCs in their agreement with banks to bear the loss due to fraud or any wrongdoing on the part of CSPs, considering that frauds are low on the BC platform, the stipulation of ₹50 lakh security deposit for 1,000 CSPs appears to be unreasonable, unjust and unfair, he said.
Published on April 7, 2026
