Banking and monetary regulator, Reserve Bank of India has said that non banking finance companies (NBFCs) getting appointed as business correspondents (BCs) is not seen to be in the interest of banks.

The apex bank has allowed non profit companies to act as BCs for banks but the consent has not been given to NBFCs.

"There is a certain conflict of interest there because business correspondents are something banks are using as an extension of their services in unbanked areas. NBFCs in that sense are a competitor to banks. Whether a competitor can be an agent is a broader issue," said RBI Deputy Governor Subir Gokarn.

While appointing non profit companies, RBI had cited that strong and widespread network of these companies backed by strong financial backbone and organizational strength could be beneficial towards financial inclusion.

"The transition from non-profit to for-profit will immediately expand the choice of agents. We will have to see what advantage is being taken of it. There are some bridges yet to be built. For example, entities like oil marketing companies, which have a wide distribution network, need to come out with viable business plans. Banks and these entities need to talk about how they come together," said Gokarn.

"Banks also need to make some money out of it (financial inclusion) . It cannot be a subsidised or a cross-subsidised model if it has to reach the level we intend it to achieve," said Gokarn.