BCRC Seeks Grandfathering as RBI’s BC Recertification Rule Nears

Source: Business Standard

Context

The Reserve Bank of India’s (RBI) Draft Policy 2026-Commercial Banks (Branch Authorisation) of April 2026 mandated that Business Correspondents (BCs) obtain advanced certification from the Indian Institute of Banking & Finance (IIBF). The rule becomes operational from 1 July 2026. The Business Correspondent Resource Council (BCRC) has sought grandfathering of the requirement, arguing that forcing already certified BCs to take advanced IIBF certification may trigger mass exits. The move affects about 45 per cent of India’s 1.17 million BC workforce, the world’s largest boots-on-the-ground financial inclusion initiative. BCRC CEO D. Tripathy has also demanded that future IIBF syllabus revisions be accompanied by a minimum 36-month grandfathering window. The certification cost (about ₹1,500) is roughly half the monthly earnings for many BCs, given that average commissions have declined to ₹7,000-8,000 per month (down from ₹10,000-11,000 five years ago).

The Rule

• Source: RBI Draft Policy 2026 – Commercial Banks (Branch Authorisation) of April 2026.
• Requirement: BCs to obtain advanced certification from IIBF.
• Less than a fortnight of lead time before becoming applicable.

The BCRC’s Demand

• BCRC (Business Correspondent Resource Council) has sought:
  • Grandfathering of existing certification.
  • Minimum 36-month grandfathering window for future IIBF syllabus revisions.
• Argument: Re-certification under revised syllabus invalidates good-faith certifications.

What is a Business Correspondent (BC)?

• A bank’s representative providing last-mile banking services in remote and underserved areas.
• Launched by RBI: 2006.
• Acts as the front face of the bank in villages and underserved areas.
• Functions:
  • Cash deposits and withdrawals.
  • Account opening.
  • Aadhaar Enabled Payment System (AEPS) transactions.
  • Recurring deposits and term deposits.
  • Insurance and pension enrollment.
  • DBT distribution.
  • Loan recovery.

Who Can Be a BC?

• NGOs.
• Section 8 companies (formerly Section 25).
• Civil Society Organisations.
• Cooperatives.
• Post Offices.
• Companies registered under Companies Act.
• Common Service Centres (CSCs).
• Individuals (since 2010).

What is IIBF (Indian Institute of Banking & Finance)?

• Founded: 1928 as Indian Institute of Bankers (IIB).
• Renamed: Indian Institute of Banking & Finance (IIBF) in 2002.
• Type: Distance Learning Institute.
• Association: With about 775+ banks and financial institutions.
• Purpose: Provides banking and finance professional certifications.
• Sole certifying agency for BC/BF under RBI mandate.

About the National Strategy for Financial Inclusion (NSFI) 2025-30

• Released: 1 December 2025 by RBI Governor Sanjay Malhotra.
• Approved by: Sub-committee of Financial Stability and Development Council (FSDC-SC) at its 32nd meeting.
• Period: 2025-30.
• Synchronised with: UN 2030 Agenda for Sustainable Development.

The Five “Panch Jyoti” Goals of NSFI 2025-30 (Verified)

1. Universal access to affordable financial services.
2. Improving equity, reach, consistency, and quality of last-mile access (BC strengthening).
3. Gender-sensitive approach for women-led financial inclusion.
4. Strengthening customer protection.
5. Improving the financial inclusion ecosystem.

About BSBDA (Basic Savings Bank Deposit Account)

• Introduced by RBI: 2012 (replacing “no-frills” accounts).
• Type: Zero-balance savings account.
• For: Promoting financial inclusion.
• Includes: All PMJDY accounts.
• Status (March 2025):
  • Number of BSBDAs: 72.4 crore (up 2.6 per cent YoY).
  • Aggregate balance: ₹3.3 trillion (up 9.5 per cent).
  • Majority channelised through BC model.

About the Financial Inclusion Index (FI-Index)

• Composite measure of financial inclusion.
• Range: 0 to 100.
• Methodology: Captures access, usage, and quality.
• Released annually by RBI.
• FI-Index (2025): 67 (up 24.3 per cent since 2021).

Practice MCQs

Q1. With reference to the RBI Draft Policy 2026 on Business Correspondents, consider the following statements:

1. The Draft Policy 2026-Commercial Banks (Branch Authorisation) of April 2026 required BCs to obtain advanced IIBF certification.
2. The rule becomes operational from 1 July 2026.
3. The Business Correspondent Resource Council (BCRC) has sought grandfathering of the requirement.
4. The new rule will affect only 5 per cent of India’s 1.17 million BC workforce.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the new rule will affect about 45 per cent of India’s BC workforce, NOT 5 per cent.)

Q2. With reference to India’s Business Correspondent (BC) ecosystem, consider the following statements:

1. India has about 1.17 million BCs, the world’s largest boots-on-the-ground financial inclusion initiative.
2. BCs were launched by RBI in 2006 to deliver last-mile banking services.
3. The average BC commission has declined to ₹7,000-8,000 per month (from ₹10,000-11,000 five years ago).
4. About 35 per cent of BCs earn more than ₹50,000 per month.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; about 35 per cent of BCs earn LESS than ₹5,000 per month, NOT more than ₹50,000.)

Q3. With reference to the National Strategy for Financial Inclusion (NSFI) 2025-30, consider the following statements:

1. NSFI 2025-30 was released on 1 December 2025 by RBI Governor Sanjay Malhotra.
2. It outlines five strategic goals (Panch Jyoti) supported by 47 specific action points.
3. It targets reaching 1 billion UPI users by December 2029.
4. It was approved by the SEBI Board.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; NSFI was approved by the Sub-committee of Financial Stability and Development Council (FSDC-SC), NOT the SEBI Board.)

Q4. With reference to the IIBF (Indian Institute of Banking & Finance), consider the following statements:

1. IIBF was founded in 1928 as the Indian Institute of Bankers and renamed IIBF in 2002.
2. It is RBI-designated as the sole certifying agency for SCBs, RRBs, SFBs, and Payments Banks for BC/BF certification.
3. IIBF offers both Basic and Advanced BC certifications, which are independent of each other.
4. BCs must complete IIBF certification within 24 months from the date of commencement of operations.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; BCs must complete IIBF certification within 9 months from the date of commencement of operations, NOT 24 months.)

Q5. With reference to BSBDAs and PMJDY, consider the following statements:

1. BSBDAs increased by 2.6 per cent to 72.4 crore at end-March 2025.
2. The aggregate balance in BSBDAs was up 9.5 per cent to ₹3.3 trillion.
3. A majority of BSBDAs continues to be channelised through the BC model.
4. BSBDAs require maintenance of a minimum balance to remain active.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; BSBDAs are zero-balance accounts and do NOT require maintenance of a minimum balance.)

Q6. With reference to the BCRC’s specific demands, consider the following statements:

1. The BCRC has sought grandfathering of existing certifications.
2. The BCRC has demanded a minimum 36-month grandfathering window for future IIBF syllabus revisions.
3. The BCRC has said that banks should take responsibility for training and certification process.
4. The IIBF certification cost (about ₹1,500) is about half the monthly earnings for many BCs.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the rule affects 45 per cent of BCs.
2. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because 35 per cent earn less than ₹5,000.
3. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because FSDC-SC approved it.
4. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because certification must be completed within 9 months.
5. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because BSBDAs are zero-balance.
6. (d), All four statements are correct.