RBI/2013-14/570 RPCD.FID.BC.No.
96/12.01.011/ 20013-14
SCALING UP OF THE BUSINESS CORRESPONDENT (BC) MODEL
ISSUES IN CASH MANAGEMENT
ISSUES IN CASH MANAGEMENT
Please refer to Para 26 (Part B) of Governor's bi-monthly policy
statement dated April 1, 2014 on the above subject.
2. In this connection, we
advise that, after opening of large number of banking outlets in the last three
years in hitherto unbanked areas of the country through the BC-ICT model, the
time has come to monitor the usage in terms of transactions per BC so as to
ensure sustainability of the BC model. One of the critical issues identified in
this regard has been of Cash Management of BCs.
3. The insistence by banks
on BCs to fully prefund their accounts even after considerably long business
relationship has become a major impediment in scaling up operations of BCs.
Similarly, low/delayed payment of remuneration of BCs and passing on the
responsibility of insuring cash to BCs have also been proving to be irritants
in increasing the usage in large number of bank accounts opened. It is,
therefore, important for banks to recognize that cash handled by BCs, while
doing banking business on behalf of the Bank, is Bank's Cash. In view of the
above and with a view to scale up the BC model it has been decided that:-
i.
The Boards of the Banks must review the operations of BCs at
least once every six months with a view to ensuring that requirement of
prefunding of Corporate BCs and BC Agents should progressively taper down with
the passage of time. Ideally in all normal cases the prefunding should
progressively come down in such a manner so as to reach around 15% of the
limits fixed for each BC/CSP in case of deposits and 30% in case of Bank
Guarantees, etc. in say 2 years from the time a BC starts operations.
ii.
The Board should also review the position of payment of
remuneration of BCs and should also lay down a system of monitoring by the top
management of the Bank. The issue of allowing BCs to handle deposit and payment
transactions of various credits, remittance, overdraft and other products of
banks must also be examined by the Board from time to time. Complaints
redressal system in this regard should also be laid down by the Board.
iii.
As the cash handled by BCs is Bank’s cash, the
responsibility for insuring this cash should rest with the banks.
Yours faithfully
(A Udgata)
Principal Chief General Manager
Principal Chief General Manager