**Executive Summary**
The Reserve Bank of India (RBI) issues amendment directions for Payments Banks concerning the undertaking of financial services. This document, titled "Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Amendment Directions, 2026", modifies the "Reserve Bank of India (Payment Finance Banks – Undertaking of Financial Services) Directions, 2025" (Master Direction) and takes effect on April 1, 2026. It outlines revised regulations for agency business and referral services.
**Key Points / Main Content**
* **Definitions:**
* "Regulated financial products and services" are defined as those under the purview of financial sector regulators like RBI, SEBI, IRDAI, and PFRDA.
* "Third-party Product and Service (TPPS)" is defined under the RBI (Payments Banks - Responsible Business Conduct) Directions, 2025.
* "Third-party Product and Service Provider (TPPSP)" refers to an entity in an agency or referral arrangement with a bank to offer its products/services to bank customers.
* **Amendments to the Master Direction:**
* Paragraphs 7 and 8 are deleted.
* Paragraphs 12 to 15 are substituted with revised guidelines for banks facilitating the sale of TPPS under agency business:
* Banks can only deal with regulated financial products and services.
* TPPS must be listed on bank websites/apps.
* Banks must comply with RBI (Payments Banks - Responsible Business Conduct) Directions, 2025.
* Agency business must be fee-based without risk participation, disclosed upfront.
* TPPSP must have robust customer grievance redressal arrangements.
* Paragraph 16 is substituted with guidelines for banks referring customers to TPPSP:
* Banks must comply with RBI (Payments Banks - Responsible Business Conduct) Directions, 2025.
* The bank's role must be purely referral, with a clear disclaimer to customers.
* The bank's name/brand should not appear on TPPS documents.
* A list of TPPS under referral arrangement must be published for transparency.
* TPPSP selection requires due diligence to mitigate reputational risks, and TPPSP must have robust customer grievance redressal.
* Banks can collect a one-time referral fee, with no other income streams from the arrangement.
**Impact Analysis**
**Impact**
* Banks are required to modify their agency business and referral service practices to align with the new directions. This includes updating agreements with TPPSPs, adjusting fee structures, enhancing transparency, and ensuring compliance with the outlined conditions.
**Action Required**
* Review and update existing policies and procedures related to agency business and referral services to comply with the amendment directions. Communicate changes to relevant staff and partners.
* TPPSP (Third-party Product and Service Provider) providers need to ensure compliance.
**Impact**
* Consumers will potentially benefit from greater transparency and protection in agency banking and referral services, specifically regarding the products and services offered by banks.
**Action Required**
* No action is required.
Key Entities Referenced
Reserve Bank of India (Payment Finance Banks – Undertaking of Financial Services) Directions, 2025: The original 'Master Direction' being amended by this document, outlining guidelines for payments banks undertaking financial services.
Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Amendment Directions, 2026: The amendment directions related to payments banks undertaking financial services.
Banking Regulation Act, 1949: The primary legislation under which the Reserve Bank of India exercises its powers, specifically Section 35A is cited.
Reserve Bank of India (Payments Banks - Responsible Business Conduct) Directions, 2025: Directions relating to the responsible business conduct of payment banks.
Reserve Bank of India: The regulator issuing the directions and responsible for overseeing payments banks.
DOR.RAUG.AUT.REC.No. /24.01.041/2025-26 XX 2026
Draft Reserve Bank of India (Payments Banks – Undertaking of Financial
Services) Amendment Directions, 2026
In exercise of the powers conferred by Section 35A 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
(Payment Finance Banks – Undertaking of Financial Services) Directions, 2025
(“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 (Payments Banks - Responsible Business Conduct) Directions, 2025.
3. Short Title and Commencement
(1) These Directions shall be called the Reserve Bank of India (Payments Banks -
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 (Payments
Banks – Undertaking of Financial Services) Directions, 2025 as under:
(i) In paragraph 4 of the Master Direction, the following shall be inserted after sub-
para (3), namely: -
“(4) Regulated financial products and services means financial products and
services which fall under the regulatory framework of any of the financial sector
regulators viz. Reserve Bank of India, Securities and Exchange Board of India (SEBI),
Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund
Regulatory and Development Authority (PFRDA).(5) Third-party Product and Service (TPPS) means a product or service as defined
under Reserve Bank of India (Payments Banks - Responsible Business Conduct)
Directions, 2025.
(6) Third-party Product and Service Provider (TPPSP) means an entity which has
entered into agency business or referral arrangement with a bank to offer its product
or service (Third-party Product or Service (TPPS)) to a customer of the concerned
bank.”
(ii) Paragraphs 7 and 8 of the Master Direction stand deleted.
(iii) For paragraphs 12 to 15 of the Master Direction, the following shall be
substituted, namely:-
“12. Banks may facilitate the sale of a TPPS under the agency business arrangement
as specified below:
(1) Banks shall only deal with regulated financial products and services in which a
bank is permitted to deal in as per sub-section (a) to (m) and (o) of Section 6(1)
of the Banking Regulation Act, 1949. Only such TPPS which are covered under
the arrangement shall be listed or displayed on websites, mobile applications,
or any other digital banking channels offered by the banks.
(2) Banks shall ensure that it is in full compliance with the instructions on Reserve
Bank of India (Payments Banks - Responsible Business Conduct) Directions,
2025.
(3) Agency 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 TPPSP whose products are being sold has robust
customer grievance redressal arrangements in place. The bank may facilitate
the redressal of grievances.
13. Deleted.
14. Deleted.
15. Deleted.”
(iv) For paragraph 16 of the Master Direction, the following shall be substituted,
namely:-
2“16. Banks may refer their customers to a TPPSP only for regulated financial products
and services (except insurance) subject to the conditions listed herein:
(1) Banks shall comply with the instructions on Reserve Bank of India (Payments
Banks - Responsible Business Conduct) Directions, 2025.
(2) It shall be ensured that the role of the bank is purely referral in nature and the
bank is not involved in any of the processes relating to the TPPS such as
marketing, distribution, grievance redressal, etc. The same should be made
explicitly clear upfront through a disclaimer to the customers.
(3) The name or brand of the bank shall not feature in any of the product/ service
documents.
(4) The list of TPPS under the referral arrangement of a bank shall be published
on their websites, mobile application, and any other digital banking channels to
ensure transparency.
(5) The selection of the TPPSP shall be done with proper due diligence so as to
take care of the reputational risks to which the bank may be exposed to while
dealing with the TPPSP. It shall be ensured that TPPSP whose products are
being referred has robust customer grievance redressal arrangements in place.
(6) Banks may collect only a one-time fee from the TPPSP at the point of referring
its customers. No other stream of income/ fee or commission in any form should
be collected by the bank under the referral arrangement.”
(Manoranjan Padhy)
Chief General Manager
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