A Boost For Doorstep Banking: India Eases Restrictions In Latest Guidelines

June 14, 2022
The Reserve Bank of India has issued new guidelines that will make it easier for urban cooperative banks to offer doorstep banking services.

The Reserve Bank of India (RBI) has issued new guidelines that will make it easier for urban cooperative banks to offer doorstep banking services.

In its latest guidance, published on June 8, the RBI said that urban cooperative banks will no longer need to seek prior approval before opening a new place of business that offers doorstep banking.

This applies to all “financially sound and well managed” (FSWM) urban cooperative banks, as per the RBI’s criteria.

However, for those considered “non-FSWM”, they must first seek approval from their regional RBI supervision office before offering new doorstep banking services.

As of March 2021, according to data from the RBI, there were 1,534 urban cooperative banks in India.

Shrimohan Yadav, chief general manager at the RBI, said the new rules will be reviewed by the boards of urban cooperative banks on a half-yearly basis during their first year, and on an annual basis thereafter.

Banking on a busy schedule

The Ministry of Finance launched doorstep banking in India in 2020.

At the time, the move was part of a series of enhanced access and service excellence (EASE) reforms to the public banking sector that first began rolling out in 2018.

Against the backdrop of COVID-19, doorstep banking aimed to ensure that Indians still had access to banking services despite lockdown restrictions.

In a statement issued at the time, the Ministry of Finance said it expected senior citizens and disabled persons to benefit most from the initiative.

However, doorstep banking has since evolved into an at-home or at-office convenience for any customer who is short on time.

Deutsche Bank India, for example, markets the service to anyone who leads a “life full of hectic schedules”.

In its latest guidance, the RBI defines doorstep banking based on three service types: pick ups; delivery; and submissions.

Pick ups include collections by bank staff of cash and other payment instruments.

Delivery includes the drop off of cash or demand drafts withdrawn from the customer's account. It also includes the delivery of cash against a cheque received at the counter or request received from other channels, such as phone or online banking.

Submissions allow customers to submit key documents to doorstep banking staff, such as Life Certificates used by Indian pensioners, or evidence to fulfil know your customer (KYC) requirements.

The RBI adds that all urban cooperative banks that offer doorstep banking must comply with the Master Direction - Know Your Customer (KYC) Direction 2016.

They must also ensure that employees and agents that handle cash pick ups are adequately trained to detect forged and mutilated notes to protect against fraud.

In addition to defining what services meet the criteria of doorstep banking, the guidelines offer procedural advice for service delivery.

For example, cash collected from customers should be credited to their account on the same day or next working day, depending on the time of collection, and should be acknowledged with a receipt.

Regular banking v doorstep banking

The RBI notes that doorstep banking services should be seen as an extension of banking services offered at the branch, and the liability of the bank should be the same as if the transactions were conducted at the branch.

Agreements between bank and customer should not provide any right for customers to claim regular services at their doorstep, and there should be no legal or financial liability for a bank that is unable to provide doorstep services due to circumstances beyond its control.

Other risk management measures include cash limits for collection and delivery, minimising technology risk and stating applicable charges prominently in bank communications, whether in-store, online or in printed material presented by doorstep employees or agents.

Doorstep banking services may be offered at either the residence or office of the customer as opted by the customer, the address of which should be clearly and explicitly mentioned in the agreement.

The agreement with the customer must also specify that the urban cooperative bank is responsible for all acts of omission and commission by agents working on its behalf.

These guidelines are submitted under Section 23 of the Banking Regulation Act 1949.

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