1. Concept & Evolution

RBI introduced BC model in 2006 to provide doorstep banking where brick-and-mortar branch is not viable. Willful defaulters are prohibited from acting as BCs to ensure integrity.

RBI Master Directions now clarify:

• BC-BO: Banking Outlet manned by BC with fixed location, minimum infrastructure
• BC-BT: Touchpoint - intermittent location like CSP, Kiosk
• What is NOT a Banking Outlet: ATMs, E-lobbies, Cash Deposit Machines, E-Kiosks and Mobile Branches will not be treated as Banking Outlets unless operated under BC arrangement. All existing outlets manned by BCs must be classified as BC-BO or BC-BT by Sept 30, 2026.

Banks can also appoint digital business facilitator or business correspondent to expand virtual footprint of Digital Banking Units (DBUs).

Types of Kiosk Concession:

1. Customer Service Point (CSP) Model: SBI, PNB, Bank of Baroda give kiosk ID to individual/VLE. Example: SBI Kiosk Banking, Fino, PayPoint.
2. Corporate BC Model: Companies like Oxigen, Spice Money take master concession and sub-contract to retail kiosks.
3. DBU Kiosk Model: Self-service kiosk inside DBU for account opening, video KYC.

Revenue Model: Commission per transaction + Concession fee paid by kiosk operator to bank / Corporate BC.

2. Legal Nature of Concession Agreement

The agreement is License, not Lease. This is critical.

In Kiosk concession cases, Courts held licensee has only liberty to occupy for 11 months, legal possession remains with Corporation/Bank. On revocation, they cannot claim settled possession.

Therefore:

• Bombay High Court Rule - Draft Concession Not Binding: An arbitration clause in draft concession agreement annexed to bid document does not constitute binding arbitration agreement between parties if concession agreement has not been executed. You need executed agreement, not RFP annexure.
• NCLAT - Termination Does Not Discharge Debt: Termination of Concession Agreement does not discharge corporate debtor's obligation to repay when termination has no relation to default. Government taking over project does not transfer debt automatically.

This applies directly to banking kiosks - if your kiosk concession is terminated, your settlement liability to bank does not extinguish.

3. RBI Compliance Framework for Kiosks

A. Outsourcing Guidelines 2021:
Bank is liable for acts of omission and commission of BC. The revised code puts onus on banks for conduct of their business correspondents. Banks will be responsible for any acts of omission and commission committed by BCs.

B. Customer Protection - Zero Liability Framework:

RBI Circular dated July 6, 2017 - Limiting Liability of Customers in Unauthorized Electronic Banking Transactions:

• Zero Liability: Where contributory fraud/negligence/deficiency on part of bank, or third party breach where deficiency lies neither with bank nor customer, if customer notifies within 3 working days.
• Burden of proving customer liability lies with the bank, says RBI

C. KYC & Cyber Security: BC must do real-time biometric eKYC via AEPS, not store data. Must follow RBI Cyber Security Framework for BCs 2023.

4. Case Laws - Banking Kiosk & BC Liability

1. Kerala High Court - SBI v. Cybercrime Victim (2026 LiveLaw Ker 591)
Justice Harisankar V Menon set aside Ombudsman order, held customer entitled to zero liability because she reported fraud same day. Bank could not prove negligence. Applied to kiosk banking where customer did transaction at BC point - bank cannot shift blame to BC, must refund.

2. Kerala HC General Principle - Bank Liable for Unauthorized Transactions
Court held if customer suffers loss in transactions made without his junction by fraudsters, it has to be presumed it is on account of failure on part of bank to put in place system which prevents such withdrawals, and banks are liable.

3. HDFC Bank vs Fawia Menezes Mesquita - Goa State Commission
Where complainant gave control of internet banking credentials to third party, banks cannot be held liable. Complainant flouted all safeguards and acted with negligence. Important for kiosk - if customer shares MPIN/Aadhaar with kiosk operator voluntarily, liability shifts.

4. Amitabha Dasgupta v. United Bank of India (Civil Appeal 3966 of 2010) SC
Locker hiring facility - Supreme Court held banks cannot wash off their hands and claim no liability. Banks as bailor must exercise due diligence. Principle extended to kiosk banking - bank as principal cannot absolve liability via agreement clause. Banks cannot absolve liability via agreement.

5. K. Ramani vs Reserve Bank of India (2024)
Upheld limited liability framework - customer zero liability where bank failed. Court reiterated 3-day notification rule.

6. Adjudicating Officer under IT Act Sec 46A Cases
Landmark judgment: According to RBI banking codes, customer liability for fraud is only up to Rs 10,000, bank to make good rest in case of fraud by BC/technical failure.

5. Major Compliance Risks Specific to Kiosk Concession

1. Fraud & Identity Theft: BC using customer biometric for multiple transactions. Liability: Bank + Corporate BC jointly.

2. Settlement Risk: Kiosk collects cash, fails to remit to bank. RBI says bank must honor customer deposit receipt issued by BC, even if BC defaults.

3. Fee & Mis-selling: SEBI and RBI have fined banks where kiosk CSP sold insurance without license.

4. Data Protection: Under DPDP Act 2023, kiosk is Data Processor, bank is Data Fiduciary. Biometric storage at kiosk = criminal offense under Aadhaar Act Sec 37.

6. Draft Concession Checklist for Bank Lawyer

1. Nature: License Agreement with principal-agent clause under Indian Contract Act Sec 182
2. Exclusivity, territory, branding
3. Settlement - T+0 / T+1, escrow account, bank guarantee
4. RBI BC guidelines incorporation by reference
5. Liability cap + insurance (Fidelity insurance)
6. Audit rights, CCTV, termination for fraud
7. Customer grievance redressal - display Ombudsman details
8. Non-storage of biometrics undertaking

If you are taking a kiosk concession or giving one, the single most litigated point is who bears loss when BC operator absconds after collecting cash. As per RBI and Courts, customer gets zero liability, bank pays, then bank recovers from BC.