Central bank revises banking correspondent classification, Pg20

Key Highlights:

• The RBI has proposed a revised classification for banking correspondents based on their assignments.
• The proposal suggests uniformity in fixing wages for banking correspondents.
• As of June 2025, over 16 lakh business correspondents were engaged by various lenders.
• FPI investment limits for G-Secs, SGSs, and corporate bonds will remain unchanged for FY27.

Detailed Insights:

• The RBI aims to expand the reach of banks and promote financial inclusion by assigning banking correspondents in remote areas.
• The draft norms define three types of delivery points: bank branches, Business Correspondent-Banking Outlet, and Business Correspondent-Banking Touchpoint.
• Currently, the commissions paid to business correspondents vary across banks, leading to the need for standardized wage structures.
• The unchanged FPI investment limits for FY27 are 6% for G-Secs, 2% for SGSs, and 15% for corporate bonds.

Key Concepts Involved:

• Banking Correspondent: An agent of a bank responsible for delivering banking services in areas where banks have limited presence.
• Financial Inclusion: The delivery of banking services at an affordable cost to disadvantaged and low-income segments of society.
• FPI (Foreign Portfolio Investment): Investment in the financial assets of a country by foreign investors.