RBI Update - Reserve Bank of India (Urban Co-operative Banks – Undertaking of Financial Services) Second Amendment Directions, 2026

The Reserve Bank of India (Urban Co-operative Banks – Undertaking of Financial Services) Second Amendment Directions, 2026, effective January 1, 2027, revise the framework governing agency and referral arrangements undertaken by UCBs by introducing updated definitions of Agency Business, Referral Services, Regulated Financial Products and Services, Third-Party Products and Services (TPPS) and Third-Party Product and Service Providers (TPPSP), while aligning all customer conduct and service-related requirements with the RBI (Urban Co-operative Banks – Responsible Business Conduct) Directions, 2025. The amendments require UCBs undertaking mutual fund distribution, insurance corporate agency business, insurance referral business, online trading facilitation and National Pension System (NPS) Point of Presence services to comply with the Responsible Business Conduct Directions, conduct such activities strictly on a fee-based and no-risk participation basis, make appropriate customer disclosures, ensure that only authorised third-party products are displayed on digital channels, and verify that partner entities maintain robust grievance redressal mechanisms. The Directions also remove several existing provisions relating to disclosure of commissions, insurance and referral arrangements, update eligibility and application requirements for online trading facilities, and consolidate customer protection, transparency and conduct standards under a single Responsible Business Conduct framework.