The Reserve Bank of India has amended its 2025 directions on Regional Rural Banks undertaking financial services, revising the framework for agency business and referral services involving third-party financial products. The changes clarify the permitted distribution and referral models for regulated products and move customer service and conduct requirements into the separate Reserve Bank of India Regional Rural Banks Responsible Business Conduct Directions, 2025. The amendment takes effect on January 1, 2027. The revised rules define agency business as a no-risk arrangement under which a Regional Rural Bank acts on behalf of a third-party provider to market and sell financial products or services to its own customers, including related after-sales support. Referral services are limited to cases where the bank only shares information on a third-party product or service and does not undertake continuing customer interactions such as distribution, grievance redressal or post-sales service. The amendment also adds definitions for regulated financial products and services, third-party products and third-party providers. For specific product lines, Regional Rural Banks may market mutual fund units as agents with board approval, subject to Securities and Exchange Board of India requirements, and may undertake corporate agency business for all types of insurance products, including health and animal insurance, subject to Insurance Regulatory and Development Authority of India rules for composite corporate agents. In both cases, the business must be conducted on a fee basis without risk participation, with that position disclosed upfront to customers, supported by adequate controls, and limited on bank websites and digital channels to products covered by the relevant arrangement. The amendment also updates the rules for insurance referral arrangements to align with the Responsible Business Conduct Directions and relevant Insurance Regulatory and Development Authority of India requirements, and removes the existing paragraph on disclosure of commissions and fees from the master direction.
Reserve Bank of India2026-06-15
Reserve Bank of India revises Regional Rural Bank agency and referral rules for third party financial products from January 1 2027
The Reserve Bank of India has revised the rules for Regional Rural Banks undertaking agency business and referral services for third-party financial products, effective January 1, 2027. The amendment clarifies the boundary between agency and referral models, updates conditions for distributing mutual fund and insurance products, and shifts conduct requirements into the separate Responsible Business Conduct Directions, 2025.