Reserve Bank of India amends payments bank financial services directions to redefine agency business and tighten referral service boundaries

The Reserve Bank of India issued amendment directions to its Payments Banks – Undertaking of Financial Services Directions, 2025, updating the framework for payments banks offering third-party financial products through agency and referral arrangements. The changes take effect from December 05, 2025. The amended definition of “Agency Business” covers arrangements where a bank acts as an agent of a third-party product or service provider without risk participation and requires an agreement for the sale of only regulated financial products or services such as insurance, mutual funds and pension funds. Permitted agency activities include marketing, sales, promotion, acting as the initial point of contact for grievance redressal and providing after-sale services. “Referral Services” is redefined as making information available to refer customers to third-party offerings, while prohibiting the bank from being involved in any processes related to the third-party products or services, featuring the bank’s name or brand in product documentation, integrating such processes with the bank’s platform or conducting them within bank premises unless specifically permitted, and providing access via a bank micro-site or micro-application other than an access link that redirects the customer to the third-party provider. The amendments follow a review of earlier instructions and stakeholder consultation on a draft placed on the RBI website on October 04, 2024, and were issued under Section 35A of the Banking Regulation Act, 1949.