RBI Update - Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Amendment Directions, 2026

The Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Amendment Directions, 2026, effective from January 1, 2027, revise the regulatory framework governing agency business and referral services undertaken by Payments Banks. The amendments redefine “Agency Business” and “Referral Services”, introduce definitions for “Regulated Financial Products and Services”, “Third-party Product and Service (TPPS)” and “Third-party Product and Service Provider (TPPSP)”, and remove certain existing provisions relating to agency and referral arrangements. Under the revised framework, Payments Banks may undertake agency business only for regulated financial products and services permitted under Section 6(1) of the Banking Regulation Act, 1949, on a fee basis without risk participation, with upfront disclosure to customers and compliance with the RBI (Payments Banks – Responsible Business Conduct) Directions, 2025. Banks must ensure that TPPS providers have effective grievance redressal mechanisms. For referral arrangements, Payments Banks may only market and refer customers to TPPS providers and cannot sell products under such arrangements. The Directions require clear disclosure of the bank’s limited role, publication of TPPS lists on digital channels, prohibition on integration of TPPS processes within the bank’s platform except through redirection links, and due diligence on TPPS providers to mitigate reputational risks. Customer service and conduct-related provisions are simultaneously consolidated under the RBI (Payments Banks – Responsible Business Conduct) Directions, 2025.