Microfinance Focus, September 30, 2010: For extending banking services to the underserved, the Reserve Bank of India (RBI) has decided to permit banks to engage for-profit companies registered under the Indian Companies Act, 1956, excluding Non Banking Financial Companies (NBFCs), as Business Correspondents (BCs) in addition to the entities permitted earlier.

RBI has earlier placed a discussion paper on engagement of ‘for profit’ companies as BCs on its website in August and taking into consideration the pros and cons and based on the feedback received from various quarters, it has taken the decision.

Sending out a notice to all commercial banks including Regional Rural Banks (RRBs) and Local Area Banks (LABs), RBI has also issued guidelines for engaging of Business Correspondents. These guidelines include eligibility criteria, BC model, scope of activities KYC norm, customer confidentiality and transactions put through BCs among others.