RBI Update - Reserve Bank of India (Small Finance Banks - Responsible Business Conduct) Second Amendment Directions, 2026

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Small Finance Banks – Responsible Business Conduct) Second Amendment Directions, 2026, effective from 1 January 2027, introducing a comprehensive framework governing the advertising, marketing and sale of financial products and services by Small Finance Banks (SFBs). The Directions seek to strengthen customer protection by prescribing standards on explicit customer consent, suitability and appropriateness assessments, transparent disclosures, grievance redressal, customer compensation, and responsible engagement of Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs). The framework defines and prohibits practices such as mis-selling, compulsory bundling and the use of dark patterns in digital interfaces, while requiring SFBs to implement robust policies, codes of conduct, customer feedback mechanisms, and controls over third-party product distribution. The amendments are aimed at promoting fair sales practices, enhancing transparency in customer interactions, and ensuring greater accountability in the distribution of both own and third-party financial products and services by SFBs.