PDF - Draft – Reserve Bank of India (Payments Banks - Branch Authorisation) Amendment Directions, 2026 ()
Draft – Reserve Bank of India (Payments Banks - Branch Authorisation) Amendment Directions, 2026

Draft

DOR.LIC.REC.No. /22.01.001/2026-27

April xx, 2026

Please refer to the Reserve Bank of India (Payments Banks – Branch Authorisation) Directions, 2025 dated November 28, 2025 (hereinafter referred to as ‘the Directions’).

2. On a review of extant instructions on ‘Business Facilitators / Business Correspondents Model’ as contained in Chapter IV of the aforesaid directions, and in exercise of the powers conferred by section 23 and Section 35 A of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank of India (RBI) in this regard, RBI being satisfied that it is necessary and expedient in public interest to do so, hereby issues the Amendment Directions hereinafter specified.

3. The Reserve Bank of India (Payments Banks – Branch Authorisation) Amendment Directions, 2026, modify the aforesaid Directions as under:

1) In paragraph 4, the definition at sub-paragraph (4) shall be substituted with the following:

“(4) ‘Branch’ has the same meaning as assigned in Section 5(cc) of the Banking Regulation Act, 1949 and is a fixed point service delivery unit, manned by bank’s staff, working for a minimum of four (04) hours per day for at least five (05) days in a week. It carries uniform signage with name of the bank and authorisation from it, contact details of the controlling authorities and complaint escalation mechanism. The bank should have a regular off-site and on-site monitoring of the branch to ensure proper supervision, ‘uninterrupted service’ except temporary interruptions due to telecom connectivity, etc. and timely addressing of customer grievances. The working hours / days need to be displayed prominently.”.

2) In paragraph 4, following definitions shall be inserted after sub-paragraph (4):

“(4a) ‘Business Correspondent’ (BC) means as an entity (juridical person) or individual (other than its own employee) who has been engaged by a bank to provide banking and other financial services, on behalf of the bank, in accordance with the guidelines contained in Chapter IV of this Direction.

(4b) ‘Business Correspondent - Banking Outlet’ (BC-BO) is a fixed-point service delivery unit, operated by a BC / BC sub-agent, offering the minimum set of services stipulated at para 39 of this direction, for a minimum of four (04) hours per day for at least five (05) days in a week in a dedicated manner while working exclusively for one bank. It carries uniform signage with name of the bank and authorisation from it, contact details of the controlling authorities and complaint escalation mechanism. The bank should have a regular off-site and on-site monitoring of the outlet to ensure proper supervision, ‘uninterrupted service’ except temporary interruptions due to telecom connectivity, etc. and timely addressing of customer grievances. The working hours / days need to be displayed prominently.

Notes:

(i) The existence of the BC-BO at a centre shall be reckoned for classification of a centre as banked.

(ii) For the purposes of these Directions, Branch and BC-BO shall together be referred to as ‘Banking Outlets’ (BO), unless mentioned otherwise.

(4c) ‘Business Correspondent - Banking Touchpoint’ (BC-BT) is a service delivery point working exclusively for one bank, operated by a BC / BC sub-agent, offering limited services stipulated at para 40 of this direction, and having flexible hours of operations. It should clearly indicate to customers the name of the bank and authorisation from it, contact details of the controlling authorities and complaint escalation mechanism. The bank should define the area of operation for these touchpoints, ensure proper supervision of these touchpoints and timely redressal of customer grievances.

Explanations:

(i) A dedicated outlet means that BC / BC sub-agent only conducts the business of providing a minimum set of stipulated services during the working hours of the BC-BO

(ii) Extension Counters, Satellite Offices, Part-shifted Branches, Ultra Small Branches and Specialised Branches, shall be classified as independent branches.

(iii) ATMs, E- lobbies, Bunch Note Acceptor Machines (BNAM), Cash Deposit Machines (CDM) / Recyclers, E- Kiosks and Mobile Branches shall not be treated as ‘BO’ or ‘BC-BT’. Point of Sale (PoS) terminals where limited cash withdrawal facility is allowed by banks in terms of extant instructions without having an arrangement with the concerned entities as ‘BC’ will not be considered as ‘BC-BO’ or ‘BC-BT’.

(4d) ‘BC sub-agent’ is an individual, engaged by a BC, who provides banking and other financial services, on behalf of the bank, at the point of customer interface, in accordance with the guidelines contained in Chapter V of this Direction.

Note: An individual engaged as a BC or BC sub-agent shall not sub-contract the function.”.

3) In paragraph 4, sub-paragraph (5) shall be substituted with the following:

“(5) ‘Unbanked Rural Centre’ (URC) is a rural (Tier 5 and 6) centre that does not have a CBS-enabled Branch / BC-BO of a commercial bank (including Small Finance Bank, Payments Bank, Regional Rural Bank and Local Area Bank) or a co-operative bank for carrying out customer-based banking transactions.”

4) In Chapter-II, in paragraph 7, Sub-heading (2) shall be substituted with the following:

“(2) Use of Business Correspondents”.

5) In paragraph 7, sub-paragraph (2)(i) shall be substituted with the following

“(i) The Board shall approve the policy for engaging Business Correspondents (BCs), which, inter alia, shall include complaint redressal system.”.

6) In paragraph 7, sub-paragraph (2) (ii) shall be deleted.

7) In paragraph 7, sub-paragraph (2) (iii) shall be substituted with the following:

“(iii.) The Board shall review the operations of BCs at least once every six months with a view to ensuring that requirement of prefunding of BCs and BC sub-agents shall progressively taper down with the passage of time as specified in paragraph 47(vi).”.

8) In paragraph 9, sub-paragraph (ii) shall be deleted.

9) In paragraph 9, in sub-paragraph (iii) “ /part time banking outlets” shall stand deleted

10) Paragraph 11 shall be substituted with the following:

“11. The State Level Bankers’ Committee (SLBC) / Union Territory Level Bankers' Committee UTLBC shall compile and have an updated list of all URCs in the State/Union Territory (UT) and display the same on its website. This list shall facilitate banks to choose / indicate the place where it wishes to open a ‘Banking Outlet.’ The bank shall inform and coordinate with the SLBC / UTLBC Convenor bank to earmark the centre identified by it. If a bank fails to open the banking outlet in the prescribed period of one year as per paragraph 9(vi) above, the SLBC / UTLBC convenor bank may indicate the centre as available for other banks to open a Banking Outlet. The non-member banks of the SLBC / UTLBC, may also refer to the website and keep the SLBC / UTLBC Convenor bank informed of the centres identified by them.”.

11) In paragraph 12, the words “ /part time banking outlets” shall stand deleted.

12) In paragraph 21, the following words shall be added at the end of the paragraph:

“However, banks can shift / close / merge these offices at their discretion without prior approval of the Reserve Bank.”.

13) In Paragraph 25, the following words shall stand deleted:

“Such ATMs shall not be reckoned as ‘Banking Outlets’ as defined in paragraph 4(4) above.”.

14) Chapter IV – ‘Business Facilitator / Business Correspondent Model’ of the Directions shall be renamed as “Chapter IV - Use of Business Correspondents by Banks”

15) Paragraphs 33 - 54 shall be substituted with the following:

“A. Eligibility

33. With the objective of ensuring greater financial inclusion and increasing the outreach of the banking sector, a bank is permitted to use the services of intermediaries in providing financial and banking services through the use of Business Correspondents as per the directions contained in this chapter.

Note - Considering that Business Facilitator (BF) undertakes functions similar to that of Business Correspondent (BC), there shall be no separate category of BF. Existing BFs, if any, shall be categorised as BC-BO or BC-BT by September 30, 2026, subject to meeting criteria set out in paragraph 4(4b) and 4(4c).

B. Operating Structure of business correspondents

34. Banks opting to engage BCs shall deploy them in the following differentiated operating structure:

i) Business Correspondent - Banking Outlet (BC-BO)

ii) Business Correspondent - Banking Touchpoint (BC-BT)

Note:

(i) All existing banking outlets manned by BCs shall be classified as BC-BO or BC-BT by September 30, 2026, and the CISBI portal shall be updated suitably.

(ii) BCs cannot function from Branches.

B.1 Guidelines for engaging Business Correspondents (BCs)

35. A bank may engage Business Correspondents (BCs), subject to compliance with the guidelines contained in this Chapter.

36. Due diligence shall be carried out on the individuals / entities to be engaged as BCs prior to their engagement. The due diligence exercise may, inter alia, cover aspects such as (i) reputation / market standing, (ii) financial soundness, (iii) management and corporate governance, (iv) cash handling ability and (v) ability to implement technology solutions in rendering financial services. Banks shall also follow Customer Due Diligence procedures stipulated in Reserve Bank of India (Payments Banks – Know Your Customer) Directions, 2025 (as updated from time to time), issued by the Reserve Bank, before onboarding BCs and BC sub-agents. Further, banks shall also carry out periodic updation of KYC of BC and BC sub-agents.

B.2 Eligible individuals / entities

37. Banks may engage any individual and entity as their BC, subject to their policy, due diligence, and no conflict of business interest between the bank and the BC. Entities (juridical persons) engaged as BCs, may appoint individuals as their sub-agents. While an entity may enter into BC arrangements with more than one bank, subject to necessary operational and data safeguards to be prescribed by banks, each BC-BO shall render services on behalf of only one bank under the arrangement.

Note: The following entities shall not be engaged as BCs:

i) Banks

ii) Deposit taking Non-Banking Finance Companies,

iii) Primary Agricultural Credit Society, unless they are on CBS and have transferred assets and liabilities to respective DCCBs,

38. The terms and conditions governing the contract between the bank and a BC shall be carefully defined in written agreements and subjected to a thorough legal vetting. While drawing up agreements, the bank shall strictly adhere to instructions contained in the Reserve Bank of India (Payments Banks – Managing Risks in Outsourcing), Directions 2025. The bank shall be fully responsible for compliance with the relevant regulations and liable for actions of the BCs and BC sub agents.

B.3 Scope of activities

39. The activities to be undertaken by the BC-BO shall be within the normal course of banking business. The indicative scope of activities undertaken / facilitated by a BC-BO may include the following, subject to acquiring qualifying certifications, as applicable: -

i) Opening of Basic Savings Bank Deposit Accounts (BSBDA)

ii) Cash Deposit, Withdrawal and Transfer (ON-US/OFF-US)

iii) Funds Transfer – IMPS/NEFT/AePS, etc.

iv) SHG Dual Authentication transactions

v) Issuance/blocking of Debit Cards

vi) Balance enquiry (ON-US/OFF-US)

vii) Mini Statement (ON-US/ OFF-US)

viii) Request for new cheque book

ix) Stop payment of cheque

x) Cheque status enquiry

xi) Cheque collection

xii) Aadhaar seeding

xiii) Mobile seeding in accounts

xiv) Updation of Passbook

xv) Request for SMS alert / email statement

xvi) Pension life certificate

xvii) Payment of Utility Bills

xviii) Lodging and tracking of complaints

xix) Lead generation and sale of micro insurance / mutual fund products / pension products / other third-party products, etc.

xx) Lead generation for opening of Current Accounts

xxi) Updation/ Periodic updation of Customer KYC

xxii) Distribution of bank notes and coins

xxiii) Creation of financial awareness

Note: List of activities as provided above is indicative and not exhaustive. Banks at their discretion may offer any additional financial services through their BC-BOs as per their bank’s policy. Further, interoperability of transactions is permitted, provided the technology available with the bank, which has appointed the BC, supports interoperability.

40. BC-BT shall only provide limited inter-operable services of small-value cash transactions and remittances, up to a threshold as per bank’s policy.

B.4 KYC Norms

41. KYC and AML procedures, as laid down in the Reserve Bank of India (Payments Banks – Know Your Customer) Directions, 2025 shall be followed in all cases. The bank may, if necessary, use the services of the BC for preliminary work relating to account opening formalities. However, ensuring compliance with KYC and AML norms for such opening of accounts shall be the responsibility of the bank. BCs may also be used for updation / periodic updation of KYC.

B.5 Customer confidentiality

42. A bank shall ensure the preservation and protection of the security and confidentiality of customer information in the custody or possession of BC.

B.6 Information Technology Standards

43. A bank shall ensure that equipment and technology used by the BC are of high standards.

B.7 Distance Criterion

44. BC-BO shall be linked with a base branch within a reasonable distance (preferably within the same district) for monitoring the operations and cash handling. The BC-BO shall be subject to mandatory periodic visit / oversight by bank officials coupled with a periodic review of BC operations by the respective controlling office of the bank. Banks shall ensure that there is no clustering of BC-BO of the same bank at the same / nearby locations, and these outlets must operate beyond a minimum distance from the bank’s branch. In case of BC-BT, banks may resort to monitoring through technological tools / remote oversight.

B.8 Payment of commission / fee

45 (1) BCs / BC sub-agents operating Banking Outlets (BC-BOs) shall be compensated for their services based on a remuneration structure comprising of fixed and variable components.

45 (2) BCs / BC sub-agents operating Banking Touchpoints (BC-BTs) shall be eligible to receive only variable remuneration.

45 (3) The fixed monthly remuneration structure shall be arrived at by the Indian Banks’ Association (IBA) through a Standing Committee set up for the purpose and shall be devised in a way that is suitably benchmarked to an external indicator. The variable remuneration shall also have an element of customer satisfaction and not merely be based on the volume of transactions.

Explanation – A standing committee under the aegis of IBA having representation from banks and business correspondents shall prescribe the minimum remuneration, and periodically review the remuneration structure based on suitable benchmarks, the share between BCs and BC sub-agents, and the need for recalibrations, etc.

45 (4) Punitive measures against BCs/BC sub-agents such as monetary penalty, revocation of terminal ID etc, for deficiencies in services; shall be based on a fair, transparent, and non-exploitative policy.

45 (5) A bank (but not its BCs/BC sub-agents) is permitted to collect reasonable service charges from the customers in a transparent manner.

B.9 Transactions put through BC

46. As engagement of intermediaries such as Business Correspondents involves significant reputational, legal and operational risks, due consideration shall be given by banks to those risks. The bank shall adopt technology-based solutions for managing the risk, besides increasing the outreach in a cost effective manner. The transactions shall normally be put through information and communication technology (ICT) based devices that are seamlessly integrated to the Core Banking Solution (CBS) of the bank. The transactions shall be accounted for on a real time basis and the customers shall receive immediate notification and verification of their transactions through visuals (screen based) or other means (debit or credit slip).

47. In formulating the schemes on BC, the bank shall be guided by the Reserve Bank of India (Payments Banks - Managing Risks in Outsourcing), Directions 2025. The arrangements with the BC shall specify:

(i) Suitable limits on cash holding by intermediaries as also limits on individual customer payments and receipts;

(ii) Issuing a receipt on behalf of the bank as acknowledgment for cash collected from the customer;

(iii) All BCs / BC sub-agents shall undertake transactions in online mode only. However, offline transactions, if any, undertaken at BC-BO due to temporary disruptions in connectivity etc., shall be accounted for and reflected in the books of the bank by the end of the day

(iv) The responsibility of the bank to the customer for acts of omission and commission of the BCs / BC-subagents in all agreements / contracts with the customer;

(v) Considering the cash transacted by BCs / BC sub-agents is bank’s cash, banks should put in place arrangements for cash management, including insurance of cash-in-transit;

(vi) Banks may also include in their policy a provision for placing suitable transaction limits along with 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. Banks may ensure that the benefit of progressive reduction in pre-funding requirements for BCs is passed on to BC sub-agents; and

(vii) BCs / BC sub-agents transactions shall be put through designated current accounts to avoid co-mingling of corporate / personal and bank funds and to enable appropriate monitoring from the KYC / AML perspective. Banks may decide their preferred mechanism for settlement of transactions either in a decentralized manner through individual BC sub-agent’s accounts, or in a centralized manner through a BC’s account.

B.10 Review of BC Operations - Internal Control, Monitoring, Operational Safeguards, and Risk Management

48. Internal Control and Monitoring

i) BC-BO shall be classified as ‘Inactive’ if there are no login or financial / non-financial transactions for a continuous period of 60 days. The existing AePS Touchpoint Operator (ATO) guidelines which prescribe 90 days inactivity norm may be applicable exclusively to BC-BT. A BC-BO classified as ‘inactive’ shall be reported as such on the BC registry portal and the relevant record shall be updated in the CISBI appropriately.

ii) A bank shall carry out a detailed review of the performance of various BCs and BC sub-agents engaged by it at least once in a year and it shall monitor the activities of BCs and BC sub-agents through its Controlling Offices. The internal control mechanism in the bank shall include visit to BCs [BC-BO] and interface with customers at periodical intervals.

iii) The bank’s policy shall lay down provisions for closure of ‘inactive’ BC-BOs and BC-BTs.

49. Operational Safeguards

i) In cases where BC / BC sub-agents have become ‘inactive’ (ref. Para 81(i), above), bank shall carry out KYC of BC and BC sub-agent before enabling them to transact further.

ii) Banks shall update the IBA BC registry portal on onboarding, training / certification, inactivation, reactivation, or removal of BCs and sub-agents on near real time basis. Initial date of starting operations as BC and BC sub-agent as well as dates of inactivation, reactivation, removal etc. shall be provided in BC registry Portal.

50. Risk Management

i) Banks shall monitor the activities of BCs and BC sub-agents through their transaction monitoring systems on an ongoing basis and set operational parameters, based on their business risk profile. Aspects such as location and nature of transaction, volume, and velocity of transactions, etc. shall form part of bank’s fraud risk management framework.

ii) The operational parameters regarding BCs and BC sub-agents shall be reviewed on a periodic basis, from the point of view of customer service, and emerging fraud patterns.

iii) Since BCs and BC-sub agents provide banking/financial services to customers, with technology (micro-ATM, biometric devices, kiosks, etc.) playing a key role in authentication, customer protection and fraud prevention, banks shall put in place adequate system level controls and safeguards.

iv) Ultimately banks are responsible for the acts of their BCs and BC sub agents and the extant guidelines on Reserve Bank of India (Payments Banks - Managing Risks in Outsourcing), Directions 2025, provide the key elements of the terms and conditions, including, that the contract between the bank and service providers shall include a clause to recognise the right of the Reserve Bank to cause an inspection to be made of a service provider by one or more of its officers or any other person. Further, such arrangements shall be carefully defined in legally vetted written agreements, and the agreement shall address the risks and have suitable risk mitigation strategies. The agreement shall allow the bank to retain an appropriate level of control over the outsourcing and the right to intervene with appropriate measures to meet legal and regulatory obligations. The agreement shall also bring out the nature of legal relationship between the parties, i.e., whether agent-principal or otherwise.

Note: IBA may put in place a model agreement for BC operations, clearly defining terms of agreement and obligations between a bank and entity / individual engaged as BC.

B.11 Consumer Protection Measures

51. A bank shall take all measures to protect the interests of the customers. Some such safeguards are outlined below:

(1) The BC/BC sub-agents shall be personally introduced to the members of public so that there is no misrepresentation / impersonation.

(2) The products and processes shall be approved by the bank and the BC and BC sub-agents shall not introduce any product / process without the approval of the bank.

(3) Each BC-BO / BC-BT shall post a sign in local language indicating their status as service provider for the respective bank. The signage shall also disclose (i) name of the BC / BC-sub agent, (ii) telephone number and email id of the base branch / controlling office of the bank, (iii) contact details of RBI Ombudsman. The applicable fees for the available services shall also be displayed prominently.

(4) Financial services offered by the BCs / BC sub-agents on behalf of the bank shall not be tied to the sale of any of the BC’s / BC sub-agent’s own products / services.

(5) The bank shall have necessary Business Continuity Plan (BCP) in place to ensure uninterrupted service in case the arrangement with the BCs / BC sub-agents is terminated. Banks shall ensure that their BC-BOs provide continuous services during their operating hours with zero tolerance for any disruption. If a BC-BO stops offering services, alternative arrangements for providing banking services shall be put in place. In other words, business continuity arrangements shall be triggered well before the BC-BO is classified as ‘inactive’.

(6) In case an entity is engaged as BC by more than one bank, it shall be ensured that the customer database and account details are kept separate and there is no co-mingling of data.

B.12 Redressal of Grievances

52. Grievance Redressal Machinery shall be constituted within the bank for redressing complaints for services rendered by the BCs and be given wide publicity through electronic and print media. The name and contact number of designated Grievance Redressal Officer of the bank shall also be made known and widely publicised. The designated officer shall ensure that grievances of customers are redressed promptly. The grievance redressal procedure of the bank and the time frame fixed for responding to the complaints shall be placed on the bank’s website. If the complaint was rejected wholly or partly by the bank, and the complainant is not satisfied with the reply; or the complainant had not received any reply within 30 days after the bank received the complaint, the complainant will have the option to approach RBI Ombudsman for redressal of grievance/s.

B.13 Disclosures

53. Information regarding BCs engaged by the bank may be placed on the bank’s website. The Annual Report of the bank shall also include the progress in respect of extending banking services through BCs and the initiatives taken by the bank in this regard.

B.14 Training and Certification

54. BCs / BC sub-agents need to be equipped with functional / operational skills, behavioural skills, and conceptual/technical knowledge. Accordingly, in order to strengthen the training and certification of BCs:

i) Banks shall have in place a policy on conducting suitably calibrated training sessions for the individuals functioning as BCs / BC sub-agents in virtual/physical mode at least on an annual basis. Trainings shall be conducted in the local language, with the frequency further calibrated based on risk assessment, performance monitoring, and operational needs, as outlined in the bank’s policy.

ii) BC / BC sub-agents operating BC-BO must possess/obtain Advanced BC Certification of Indian Institute of Banking & Finance (IIBF) within nine months of the start of operations whereas BC / BC sub-agent operating BC-BT may possess Basic BC Certification of IIBF or may complete requisite virtual/physical basic training module offered by IBA designated training institutions, or conducted by the bank engaging their services, within nine months of start of operations. Pre-certification training may be provided by empanelled agencies (as updated by IBA from time to time) and banks, subject to compliance with syllabus/training requirements set out by IBA (as amended by IBA from time to time).

iii) Individuals functioning as BCs / BC sub-agents and not completing certification / training as stipulated above, within nine months of commencing operations shall not be eligible for engagement by another bank, i.e., the nine months period shall commence from the initial date of starting operations as BCs/ BC sub-agents (as captured in the IBA BC registry portal).

iv) Banks may claim reimbursement of the cost of training and certification of individuals working as BC / BC sub-agents from the Depositor Education and Awareness Fund (DEA Fund), under a scheme to be notified separately.”.

16) In “Chapter VI – Information Reporting, ”Paragraph 71(4), shall be substituted by “A bank shall submit immediately, and in any case not later than one week, the information relating to opening, closure, inactivity, merger, shifting and conversion of BC-BO / bank branches / Offices / ATMs / NAIO, etc. online through CISBI portal to RBI.”.

17) Annex III, IV and V of Chapter VI stand modified to the extent that the term “Part Time Banking Outlet” shall stand deleted and the term “Fixed point BC Outlet” shall stand substituted by the term “BC-BO”, in all places.

4. The above amendments shall come into force from July 01, 2026.

(               )
Chief General Manager