**Executive Summary**
This document outlines the Reserve Bank of India's (RBI) Amendment Directions, 2026, concerning Non-Banking Financial Companies (NBFCs) undertaking financial services. The directions amend the "Master Direction" issued in 2025, effective April 1, 2026. The changes primarily pertain to insurance distribution, mutual fund distribution, and pension services undertaken by NBFCs, and Housing Finance Companies (HFC).
**Key Points / Main Content**
* **General Amendments:**
* Paragraph 6 of the Master Direction is deleted.
* Paragraphs 45, 46, 47, 48, and 49 of the Master Direction are deleted.
* **Insurance Distribution by NBFCs:**
* Paragraph 32 of the Master Direction is replaced with conditions for NBFCs undertaking insurance distribution without prior RBI approval, including:
* Obtaining IRDAI permission and complying with IRDAI regulations.
* Ensuring compliance with the Responsible Business Conduct Directions, 2025.
* Undertaking business on a fee basis without risk participation, explicitly disclosed to customers.
* Ensuring robust customer grievance redressal arrangements for insurance products sold.
* Listing only covered insurance products on websites and digital channels.
* Direct premium payment from insured to the insurance company.
* Paragraph 33 of the Master Direction is deleted.
* **Insurance Distribution by HFCs:**
* Paragraph 40 of the Master Direction is replaced with conditions for HFCs having a minimum Net Owned Fund (NOF) undertaking insurance distribution without prior RBI approval, mirroring those applicable to NBFCs.
* **Mutual Fund Distribution by NBFCs:**
* Paragraph 50 of the Master Direction is replaced with stipulations for NBFCs distributing mutual funds:
* Complying with SEBI guidelines/regulations.
* Ensuring compliance with the Responsible Business Conduct Directions, 2025.
* Undertaking business on a fee basis without risk participation, explicitly disclosed to customers.
* Ensuring robust customer grievance redressal arrangements for mutual fund products sold.
* Listing only covered mutual fund products on websites and digital channels.
* **Pension Services by NBFCs:**
* Paragraph 54 of the Master Direction is replaced with stipulations for NBFCs providing pension services:
* An NBFC (other than Base Layer NBFC) complying with CRAR and having made net profit in the preceding financial year shall be permitted to undertake Point of Presence (PoP) services under PFRDA for National Pension Scheme (NPS) on a fee basis without risk participation after registering with PFRDA.
* NBFCs providing PoP services must adhere to the Responsible Business Conduct Directions, 2025, and guidelines framed by PFRDA.
* Paragraph 56 of the Master Direction is replaced with a requirement for robust customer grievance redressal arrangements for pension fund products sold.
**Impact Analysis**
**NBFCs**
* **Impact**
* Subject to revised guidelines for insurance and mutual fund distribution.
* Subject to revised guidelines for providing pension services.
* **Action Required**
* Ensure compliance with the new conditions outlined for insurance, mutual fund distribution, and pension services.
* Obtain requisite permissions from IRDAI and PFRDA as necessary.
* Review and update business practices to align with the revised regulatory framework.
**HFCs**
* **Impact**
* Subject to revised guidelines for insurance distribution.
* **Action Required**
* Ensure compliance with the new conditions outlined for insurance distribution.
* Obtain requisite permissions from IRDAI as necessary.
* Review and update business practices to align with the revised regulatory framework.
Key Entities Referenced
Reserve Bank of India (Non-Banking Financial Companies – Undertaking of Financial Services) Directions, 2025: The 'Master Direction' that is being amended by the current directions.
Reserve Bank of India (Non-Banking Financial Companies – Undertaking of Financial Services) Amendment Directions, 2026: The main subject of the document: Amendment Directions for Non-Banking Financial Companies undertaking financial services.
Reserve Bank of India Act, 1934: The Act providing the powers under which these directions are being issued.
Reserve Bank of India (Non-Banking Financial Companies - Responsible Business Conduct) Directions, 2025: Directions regarding responsible business conduct by Non-Banking Financial Companies, to which NBFCs/HFCs must adhere when distributing insurance or mutual funds.
Factoring Regulation Act, 2011: Act mentioned in context of the powers conferred to issue directions.
DOR.RAUG.AUT.REC.No. /24.01.041/2025-26 XX 2026
Draft Reserve Bank of India (Non-Banking Financial Companies – Undertaking
of Financial Services) Amendment Directions, 2026
In exercise of the powers conferred by Sections 45JA, Section 45K, 45L, and 45M of
the Reserve Bank of India Act, 1934, Section 3 read with Section 31A and Section 6
of Factoring Regulation Act, 2011 and Section 30, 30A , 32 and 33 of NHB Act, 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 (Non-
Banking Financial Companies – Undertaking of Financial Services) Directions, 2025
(“Master Direction”).
2. The extant regulations governing agency business 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 (Non-Banking
Financial Companies - Responsible Business Conduct) Directions, 2025.
3. Short Title and Commencement
(1) These Directions shall be called the Reserve Bank of India (Non-Banking Financial
Companies - Undertaking of Financial Services) Amendment Directions, 2026.
(2) These Directions shall come into effect on April 1, 2026.
4. These Amendment Directions shall modify the Reserve Bank of India (Non-Banking
Financial Companies – Undertaking of Financial Services) Directions, 2025 as under:
(i) Paragraph 6 of the Master Direction stands deleted.
(ii) In paragraph 32 of the Master Direction, the following shall be substituted,
namely:-
“32. An NBFC may take up insurance distribution business, either under the corporate
agency or broking model, without obtaining the approval of the RBI subject to the
following conditions:(1) An NBFC shall obtain requisite permission from IRDAI and comply with the
relevant IRDAI regulations.
(2) An NBFC shall ensure that it is in full compliance with the instructions on
Reserve Bank of India (Non-Banking Financial Companies - Responsible
Business Conduct) Directions, 2025.
(3) The business shall be undertaken on fee basis without any risk participation.
This shall be explicitly disclosed upfront to the customers.
(4) It shall be ensured that the insurance companies whose products are being
sold have robust customer grievance redressal arrangements in place. The
NBFC may facilitate the redressal of grievances.
(5) Only such insurance products which are covered under the arrangement shall
be listed or displayed on websites or any other digital channels offered by the
NBFC.
(6) The premium shall be paid by the insured directly to the insurance company
without routing through the NBFC.
(iii) Paragraph 33 of the Master Direction stands deleted.
(iv) In paragraph 40 of the Master Direction, the following shall be substituted,
namely:-
“40. Taking up Insurance Agency Business
HFCs having Net Owned Fund (NOF) of not less than the prescribed NOF may take
up insurance distribution business, either under the corporate agency or broking
model, without the approval of the Reserve Bank, subject to the following conditions:
(1) The HFC should obtain requisite permission from IRDAI and comply with the
relevant IRDAI regulations.
(2) An HFC shall ensure that it is in full compliance with the instructions on
Reserve Bank of India (Non-Banking Financial Companies - Responsible
Business Conduct) Directions, 2025.
(3) The business shall be undertaken on fee basis without any risk participation.
This shall be explicitly disclosed upfront to the customers.
(4) It shall be ensured that the insurance companies whose products are being
sold have robust customer grievance redressal arrangements in place. The
HFC may facilitate the redressal of grievances.
2(5) Only such insurance products which are covered under the arrangement shall
be listed or displayed on websites or any other digital channels offered by the
HFC.
(6) The premium shall be paid by the insured directly to the insurance company
without routing through the HFC.
(v) Paragraphs 45, 46, 47, 48 and 49 of the Master Direction stand deleted.
(vi) In paragraph 50 of the Master Direction, the following shall be substituted,
namely:-
“50. An NBFC desirous of undertaking distributing mutual funds, shall be required to
adhere to the following stipulations:
(1) An NBFC shall comply with the SEBI guidelines / regulations, including its code
of conduct, for distribution of mutual fund products.
(2) An NBFC shall ensure that it is in full compliance with the instructions on
Reserve Bank of India (Non-Banking Financial Companies - Responsible
Business Conduct) Directions, 2025.
(3) The business shall be undertaken on fee basis without any risk participation.
This shall be explicitly disclosed upfront to the customers.
(4) It shall be ensured that the Mutual Funds whose products are being sold have
robust customer grievance redressal arrangements in place. The NBFC may
facilitate the redressal of grievances.
(5) Only such mutual fund products which are covered under the arrangement shall
be listed or displayed on websites or any other digital channels offered by the
NBFCs.”
(vii) In paragraph 54 of the Master Direction, the following shall be substituted,
namely:-
“54. An NBFC (other than Base Layer NBFC) complying with the prescribed CRAR
and have made net profit in the preceding financial year shall be permitted to
undertake PoP services under PFRDA for NPS on fee basis without any risk
participation after registration with PFRDA. An NBFC conducting PoP services shall
strictly adhere to the instructions on Reserve Bank of India (Non-Banking Financial
3Companies - Responsible Business Conduct) Directions, 2025 and the guidelines
framed by PFRDA.”
(viii) In paragraph 56 of the Master Direction, the following shall be substituted,
namely:-
“56.. It shall be ensured that the Pension Funds whose products are being sold have
robust customer grievance redressal arrangements in place. The NBFC may facilitate
the redressal of grievances.”
(Manoranjan Padhy)
Chief General Manager
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