The Reserve Bank of India has released the draft of the Branch Authorisation Amendment Directions, 2026, proposing structural changes to how cooperative banks expand their outreach and deliver banking services.
The draft allows Rural Co-operative Banks (RCBs) to engage Business Correspondents (BCs), aiming to improve financial inclusion by extending services to underserved areas without requiring physical branch expansion.
For Urban Co-operative Banks (UCBs), the framework simplifies existing models by removing the Business Facilitator (BF) category. Existing BFs will be transitioned into BC-Banking Touchpoints (BC-BTs) by September 30, 2026, subject to meeting regulatory criteria.
The draft defines service delivery points such as branches and BC-BTs, with the latter operating as dedicated outlets run by BCs or sub-agents, offering limited banking services with flexible hours. It also clarifies that BCs cannot operate from bank branches.
On compensation, BCs and sub-agents will follow a variable remuneration structure. A standing committee under the Indian Banks’ Association will set minimum benchmarks and periodically review compensation, incorporating factors such as customer satisfaction alongside transaction volumes.
The draft places accountability on bank boards to establish governance frameworks covering BC engagement, oversight, remuneration, and grievance redressal, while maintaining full responsibility for BC operations.
Additionally, the guidelines emphasise technology integration, requiring real-time transaction processing through BCs with seamless integration into core banking systems and customer notifications.
The RBI has invited stakeholder feedback on the draft directions until May 5, 2026.
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