The Reserve Bank of India has released a draft Branch Authorisation Amendment Directions, 2026, proposing key changes in how cooperative banks expand outreach and deliver banking services.
The draft proposes to permit Rural Co-operative Banks (RCBs) to engage Business Correspondents (BCs), with the objective of enhancing financial inclusion and extending banking services to underserved areas without the need for physical branches.
For Urban Co-operative Banks (UCBs), the draft rationalises the existing Business Facilitator (BF) and Business Correspondent (BC) models by removing the separate BF category. Existing BFs are proposed to be transitioned into BC-Banking Touchpoints (BC-BTs) by September 30, 2026, subject to meeting the prescribed criteria.
The draft introduces defined service delivery points, including branches and BC-BTs. BC-BTs are described as dedicated service points operated by BCs or their sub-agents, working exclusively for one bank and offering limited banking services with flexible operating hours. The draft also specifies that BCs shall not operate from bank branches.
On remuneration, the draft provides that BCs and their sub-agents shall be compensated through a variable structure. A standing committee under the Indian Banks’ Association is proposed to prescribe minimum remuneration benchmarks and periodically review the structure. The compensation framework will include parameters such as customer satisfaction in addition to transaction volumes.
The draft places responsibility on bank boards to put in place policies governing BC engagement, including oversight mechanisms, remuneration structures, and grievance redressal systems. Banks will remain fully responsible for the acts and omissions of BCs and their sub-agents.
Further, the draft emphasises the use of technology-enabled systems, requiring that transactions carried out through BCs be processed in real time and integrated with the bank’s core banking system, with appropriate customer notifications.
The proposals also outline due diligence requirements, risk management frameworks, customer protection measures, and monitoring mechanisms for BC operations.
The RBI has invited comments from stakeholders on the draft directions until May 5, 2026.
