The Reserve Bank of India (RBI) has issued Draft Amendment Directions, 2026 under Sections 35A and 56 of the Banking Regulation Act, 1949, revising the Rural Co-operative Banks (RCBs) – Undertaking of Financial Services Directions, 2025. The amendments review and update the regulatory framework governing agency and referral services undertaken by RCBs. Sub-para 10 of paragraph 15 has been deleted, and new provisions (21A to 21D) have been inserted mandating compliance with the Responsible Business Conduct Directions, 2025. The revised framework requires that insurance distribution and related activities be conducted strictly on a fee basis without any risk participation, with clear upfront disclosure to customers. RCBs must ensure that insurance companies whose products are offered have robust grievance redressal mechanisms. Only products covered under formal arrangements may be listed or displayed on digital platforms. Further, referral arrangements must comply with RBI conduct norms and IRDAI regulations. The Directions will take effect from April 1, 2026.
Reserve Bank of India
DOR.RAUG.AUT.REC.No. /24.01.041/2025-26 XX 2026
Draft Reserve Bank of India (Rural Co-operative Banks – Undertaking of Financial Services) Amendment Directions, 2026
In exercise of the powers conferred by Section 35A read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank being satisfied that it is necessary and expedient in the public interest to do so, hereby, amends the directions issued vide Reserve Bank of India (Rural Co-operative Banks – Undertaking of Financial Services) Directions, 2025 (“the Master Direction”).
2. The extant regulations governing agency business and referral services have been reviewed and, accordingly, the Master Direction has been amended and the revised regulatory framework is provided below. Further, the regulatory instructions on customer service and conduct aspects shall be consolidated in the Reserve Bank of India (Rural Co-operative Banks – Responsible Business Conduct) Directions, 2025.
3. Short Title and Commencement
i. These Directions shall be called the Reserve Bank of India (Rural Co-operative Banks – Undertaking of Financial Services) Amendment Directions, 2026.
ii. These Directions shall come into effect on April 1, 2026.
4. These Amendment Directions shall modify the Reserve Bank of India (Rural Cooperative Banks – Undertaking of Financial Services) Directions, 2025 as under:
i. Sub-para 10 of paragraph 15 of the Master Direction stands deleted.
ii. After para 21 of the Master Direction, the following shall be inserted, namely:-“21A. An RCB shall ensure that it is in full compliance with the instructions on Reserve Bank of India (Rural Co-operative Banks – Responsible Business Conduct) Directions, 2025.
21B. The business shall be undertaken on fee basis without any risk participation. This shall be explicitly disclosed upfront to the customers.
21C. It shall be ensured that insurance companies whose products are being sold have robust customer grievance redressal arrangements in place. The bank may facilitate the redressal of grievances.
21D. Only such insurance products which are covered under the arrangement shall be listed or displayed on websites or any other digital banking channels offered by the RCBs.
iii. In paragraph 26 of the Master Direction, the following shall be substituted under sub-para (1), namely:-
“(1) An RCB shall comply with the instructions on Reserve Bank of India (Rural Cooperative Banks – Responsible Business Conduct) Directions, 2025 and relevant IRDAI regulations applicable to referral arrangements with insurance companies.”
iv. Sub-paras (2) and (6) of paragraph 26 of the Master Direction stand deleted.
(Manoranjan Padhy)
Chief General Manager
