Business correspondents to undergo digital audit, new training models

New audit envisages banks using digital technologies like video-based interviews, geo-tagging technology, and transaction-based controls, committee to be headed by top SBI official

The first steps for rolling out a digital audit of the over 2.5 million business correspondents (BCs) along with their training and certification is in the works, sources said. This will be the first such audit in almost two decades. 

A working committee is likely to be formed to undertake the task, and headed by one of the managing directors of the State Bank of India (SBI) with members drawn from Yes Bank as well as the Business Correspondents Federation of India (BCFI).

The issue was discussed at a recent meeting held at the Department of Financial Services (DFS) with the monitoring committee on the functioning of BCs. 

Sources said the digital audit and monitoring of BCs will replace the Reserve Bank of India (RBI)-mandated "periodic physical audit". The new audit envisages banks using digital technologies like video-based interviews, geo-tagging technology, and transaction-based controls. Digitally-controlled sample audits of a desired percentage of BCs are to be conducted with the help of banks and corporate BCs. 

A simpler training and certification of BCs who are predominantly doing Aadhaar-enabled payment system (AePs) cash-out and money transfer services is also being considered. A sachetised, modular and service specific approach will be put in place for low-end services while for BCs offering a larger bouquet of services, the Indian Institute of Banking and Finance's structured basic and advanced level of certification will continue. 

Other issues which figured at the DFS meeting were the penalties imposed on BCs by banks and the hefty amounts charged by banks as security deposits — ranging between Rs 50 lakh and Rs 1.8 crore - for 1,000 kiosk points. It was suggested that the establishment of an infrastructure and equity fund for corporate BCs, with the option to tap National Bank for Agriculture and Rural Development, and the RBI Payments Infrastructure Development Fund, be taken up at a later date. 

BCs have of late raised concerns about the viability of the BC channel with the ministry of finance, warning that it is becoming increasingly unfeasible. In November last year, the Business Correspondent Resource Council (BCRC) had raised these concerns during a meeting with Minister of State for Finance Pankaj Chaudhary. The meeting revisited the aspects highlighted by the working group set up under the chairmanship of C S Setty, which submitted its report in December 2022. Setty, who is currently chairman of State Bank of India, was at that time the bank’s managing director.

 

Upgrade on the cards

 

Digital audit and monitoring of BCs to replace the Reserve Bank of India (RBI)-mandated periodic physical audit

 

BC training and certification to be based the level of services being offered; those offering a larger bouquet with have to take the Indian Institute of Banking and Finance’s advanced level of certification test

 

BCs have raised concerns about the viability of the channel with the Ministry of Finance, warning that it is becoming increasingly unfeasible