Reserve Bank of India has declined to accept a proposal from an Inter-Ministerial Group (IMG) to relax the stipulation that business correspondents (BC) should be within 30 km distance of a branch.
The RBI will also bring out a paper to discuss whether or not to allow profit-making organisations, including mobile service providers, to become business correspondents.
This was revealed at the first meeting of the monitoring group chaired by the Cabinet Secretary to consider the recommendations made by the IMG on usage of mobile phones to deliver financial services.
The IMG had suggested simplified know-your-customer (KYC) requirements and permitting “for profit” corporate entities to function as BCs. The IMG report was accepted by the Committee of Secretaries in April after which the Prime Minister had directed the constitution of a monitoring group to oversee implementation of the project.
In the first meeting of this monitoring group, the RBI said the proposal to allow BCs beyond 30 km distance could not be accepted due to supervisory reasons.
The banking regulator, however, added that it was not suggesting that banks open a full-fledged branch but only insisting minimal administrative presence within 30 km range to monitor BCs. On allowing for-profit entities to functions as BCs, the RBI informed that it was preparing a concept paper for public comment and a final decision will be taken by August.
With regard to relaxing the KYC norms, the RBI informed that it has written to the Department of Revenue to make changes to the list of documents required for opening an account to include the identity card issued by State Governments under NREGA.
On the issue of fixing the transaction charges payable to each stakeholder in the system, it was decided that the RBI committee, which is looking into other issues linked to this project, should fix a cap taking into consideration issues of affordability to users while also enabling the players to recover their costs.
It was also decided to set up another IMG under the Secretary, Rural Development, that would work out the process for crediting Government payments by various departments into the no-frills accounts set up under the project.
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