Context:
• The RBI has proposed revised classification and standardisation of Banking Correspondents (BCs) to improve financial inclusion and service delivery.
Key Highlights:
- Banking Correspondent Framework
• Over 16 lakh BCs operating across India (as of June 2025)
• Proposal introduces classification based on roles and assignments - Delivery Points Classification
• Three categories:
- Bank Branches
- BC-Banking Outlets
- BC-Banking Touchpoints
- Wage Standardisation
• Uniform structure to address variation in commissions across banks
• Ensures fair compensation and sustainability - Financial Inclusion Push
• Expands banking services in remote and unbanked areas
• Supports schemes like Jan Dhan Yojana, DBT transfers - FPI Investment Limits (FY27)
• Unchanged limits:
- G-Secs: 6%
- State Govt Securities (SGSs): 2%
- Corporate Bonds: 15%
- Stakeholders
• RBI
• Commercial Banks
• Banking Correspondents
• Rural and underserved populations
• Foreign Portfolio Investors - Significance
• Strengthens last-mile banking connectivity
• Improves efficiency and accountability in BC model
• Maintains stability in debt markets via FPI limits
Relevant Prelims Points:
• Banking Correspondent (BC): Agent delivering banking services in unbanked areas
• Financial Inclusion: Access to affordable financial services
• FPI: Foreign investments in financial markets
• G-Secs: Government securities issued by Centre
• SGSs: Bonds issued by State Governments
Relevant Mains Points:
- Role of BCs in Financial Inclusion
- Enable last-mile delivery of banking services
- Facilitate DBT, micro-credit, insurance, pensions
- Reduce financial exclusion in rural areas
- Challenges in BC Model
- Low and inconsistent remuneration
- Infrastructure and connectivity issues
- Lack of training and monitoring
- Significance of RBI Reforms
- Standardization improves efficiency and motivation
- Better classification enhances accountability
- Strengthens banking penetration
- Way Forward
- Improve digital infrastructure in rural areas
- Provide capacity building and training to BCs
- Integrate BCs with fintech solutions
- Strengthen monitoring and grievance redressal
UPSC Relevance:
• GS Paper III – Banking, Financial Inclusion, RBI Policies