Ref No. NB.HO DFIBT/ 6955-6979 / DFIBT-23/2023-24
11 August 2023
Circular No. 171/DFIBT-04/2023

The Chairman/Managing Director/Chief Executive Officer

All Scheduled Commercial Banks (including Small Finance Banks and Payment Banks)/Regional Rural Banks / State Cooperative Banks District Central Cooperative Banks
(Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim)

Madam/ Dear Sir,

Incentive Scheme for Customer Service Points (CSPs)/Business Correspondents (BCs) of Banks operating in North Eastern (NE) States

1. Department of Financial Services (DFS), Government of India had constituted a Monitoring Committee on the functioning of Business Correspondents (BCs) to discuss the findings of the report submitted by the Working Group on BCs which was earlier set up to study the gaps in the BC ecosystem. Further, in the 3rd meeting of the Monitoring Committee of BCs held on 13th October 2022, it was suggested that a scheme may be formulated by NABARD to compensate only those BCs who are operating in difficult areas with a direction that the Scheme be placed before the Advisory Board of Financial Inclusion Fund (FIF) for finalization.

2. Accordingly, a pilot scheme was formulated by NABARD and placed before the Advisory Board of FIF in its 30th meeting held on 12 January 2023. The Advisory Board after deliberating on the proposal, approved a pilot scheme for providing financial assistance from the FIF to CSPs/BCs (RBI Master Circular on Customer Service in Banks) of Banks operating in North Eastern States to offset some of their costs towards transport and increase their net income to make them earn sufficient income for continued operations in these areas.

3. The incentive under this scheme will be over and above the fixed commission and variable commission already being paid by the Banks. The amount is an incentive payable directly to individual BC or BC agent or CSP operator henceforth referred to as “Operator” facilitating customer transactions upon meeting the minimum level of transactions.

4. The details of the pilot scheme are as follows:

• Operative Period: The operative period of the scheme will be 3 years, i.e., from 01 April 2023 to 31 March 2026. Further extension of the scheme, if needed, will be decided based on outcome achieved under the scheme.
• Eligible Institutions: The scheme will be applicable to all Banks operating in North Eastern States (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim).
• Eligible Individuals: Operators directly engaged by Banks or Operators engaged by Banks through Corporate BCs. In other words, the individual providing the service will be eligible for the incentive and not the agency which has engaged them. The operator will be eligible for one incentive irrespective of the number of villages served by him/her.
• Eligible Locations: The Operators working in rural centres, i.e., Tier 5 & Tier 6 Centres (population up to 9,999) as per population Census 2011.
• Eligibility for claiming incentive under the Scheme:Financial Incentive of Rs.1,000/- per month to be paid to Operators of banks placed in North Eastern States for performing 50 and above financial transactions per month on an average, subject to a maximum of two top performing Operators per village.

5. Activities eligible for Support: The indicative list of broad activities that may be made available at Operator outlets is indicated in Annexure 1.

6. Procedure for claiming reimbursement from NABARD:

• The incentive of Rs.1, 000/- per month per Operator is to be given to maximum two top performing Operators per village.
• Banks to submit the proposal to the respective Regional Office of NABARD in the state where the Operators are providing their services with details. Banks are required to obtain prior approval from the concerned Regional Office of NABARD. The format of the application to be submitted by Banks is enclosed (Appendix I).
• Upon sanction by NABARD, Banks to submit the annual reimbursement claim of the previous Financial Year by 30th June of the next Financial Year in the prescribed format (Appendix II).
• Banks will be eligible to claim incentive under FIF only for those Operators who were attached to them for the entire 12 months. However, for new Operators engaged midstream during any financial year, performance of minimum six months will be taken into consideration.
• In order to work out the monthly average number of financial transactions done by the Operator, the total financial transactions done by the Operator in a financial year will be divided by 12 or number of months of engagement of Operator (subject to minimum of 6 months).
• Banks need to submit a declaration that they have credited the incentive to the eligible Operator’s bank account within 30 days from the close of the Financial Year.
• Banks to ensure review of performance of Operators on a quarterly basis by their branches and on a half-yearly basis by the Controlling Offices for taking stock of performance and for providing guidance and trouble shooting.
• All the Operators to be supported will have to be enrolled by the concerned Banks on Jan Dhan Darshak portal or any such portal maintained by DFS/IBA/RBI/NABARD.
• Banks will advise the district coordinator in the district to finalize the list of eligible top performing operator in a village in consultation with the LDM.

7. Other important conditions:

• Banks to make sincere efforts to enhance the credit flow in the financially excluded areas by setting self-imposed targets.
• All the Operators under the scheme may be covered under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) & Atal Pension Yojana (APY).
• Banks are encouraged to obtain a group medical insurance scheme for such Operators.
• Banks to connect with Lead District Manager (LDM) & State Government Authorities for prioritizing placing of Operators within a radius of 5 km of every uncovered village.

Yours faithfully
-Sd/-

(C Udayabhaskar)
Chief General Manager

Encl: as above