RBI Proposes New Framework for Banking Correspondents and Standardized Wages

The Reserve Bank of India (RBI) has unveiled a proposal to restructure the business correspondent (BC) model, aiming to boost financial inclusion and improve operational efficiency across the country. Under the new guidelines, the central bank plans to introduce a formal classification system for banking correspondents, moving away from a one-size-fits-all approach.

The initiative seeks to establish clear categories for these entities, ensuring that service providers are better aligned with the specific needs of the regions they serve. In addition to the structural changes, the RBI has emphasized the necessity of implementing uniform wage standards for banking correspondents. By standardizing compensation, the central bank aims to professionalize the role, reduce turnover, and ensure that those acting as the primary interface for banking services in underserved areas receive consistent and fair remuneration.

Regulators believe that these measures will strengthen the banking network's last-mile connectivity. By providing a more structured environment, the RBI intends to incentivize banking correspondents to expand their service offerings and improve the quality of financial outreach. These proposals are part of a broader push to modernize the banking infrastructure and ensure that the BC model remains a sustainable and effective component of India’s financial ecosystem.