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

The Reserve Bank of India (Regional Rural Banks – Undertaking of Financial Services) Second Amendment Directions, 2026, effective from January 1, 2027, revise the regulatory framework governing agency business and referral services undertaken by Regional Rural Banks (RRBs) and align customer conduct requirements with the RBI (Regional Rural Banks – Responsible Business Conduct) Directions, 2025. 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 prescribe revised conditions for distribution of mutual fund and insurance products. RRBs may undertake agency business for mutual funds and insurance products on a fee basis without risk participation, subject to compliance with applicable SEBI and IRDAI regulations, RBI’s Responsible Business Conduct Directions, adequate control mechanisms, upfront disclosure to customers, and ensuring that product providers maintain robust grievance redressal arrangements. Only products covered under the relevant arrangements may be displayed on RRBs’ websites or digital channels. The Directions also revise the framework for insurance referral arrangements by requiring compliance with RBI’s Responsible Business Conduct Directions and applicable IRDAI regulations, while omitting certain earlier provisions and deleting the requirement relating to disclosure of commission and fees to customers. Overall, the amendments consolidate customer service and conduct-related requirements under the RBI (Regional Rural Banks – Responsible Business Conduct) Directions, 2025 and strengthen governance, transparency and customer protection in the distribution of third-party financial products by RRBs.