**Executive Summary**
These draft Amendment Directions, issued by the Reserve Bank of India, modify the "Reserve Bank of India (Regional Rural Banks – Undertaking of Financial Services) Directions, 2025" (the Master Direction). The amendments pertain to agency business and referral services offered by Regional Rural Banks (RRBs). The Directions come into effect on April 1, 2026.
**Key Points / Main Content**
* **Effective Date:** April 1, 2026
* **Amendment Scope:** Modifications to agency business and referral services conducted by RRBs.
* **Mutual Fund Marketing (Amendment to Paragraph 18 of the Master Direction):**
* RRBs are permitted to market units of mutual funds as agents, with Board approval and agreement with Mutual Funds.
* RRBs must comply with SEBI guidelines and the RBI's "Responsible Business Conduct" Directions, 2025.
* The business must be undertaken on a fee basis without any risk participation, explicitly disclosed to customers.
* Retailing of mutual fund units is confined to branches.
* RRBs must implement adequate control mechanisms.
* Mutual Funds whose products are sold must have robust customer grievance redressal arrangements, which the bank may facilitate.
* Only covered mutual fund products shall be listed or displayed on RRB's websites or digital banking channels.
* **Corporate Agency Business for Insurance Products (Amendment to Paragraph 20 of the Master Direction):**
* RRBs may distribute all types of insurance products, including health and animal insurance.
* RRBs must comply with IRDAI regulations for acting as 'composite corporate agent' and the RBI's "Responsible Business Conduct" Directions, 2025.
* The business must be undertaken on a fee basis without any risk participation, explicitly disclosed to customers.
* Insurance companies whose products are sold must have robust customer grievance redressal arrangements, which the bank may facilitate.
* Only covered insurance products shall be listed or displayed on RRB's websites or digital banking channels.
* **Referral Arrangements with Insurance Companies (Amendment to Paragraph 23 of the Master Direction):**
* RRBs must comply with the RBI's "Responsible Business Conduct" Directions, 2025, and relevant IRDAI regulations for referral arrangements with insurance companies.
* Sub-paragraphs (2) and (6) of paragraph 23 stand deleted.
* **Deletion:** Paragraph 25 of the Master Direction is deleted.
**Impact Analysis**
**Regional Rural Banks (RRBs)**
* **Impact:** Changes in regulations regarding marketing of mutual funds and distribution of insurance products, requiring adherence to new compliance standards.
* **Action Required:** Implement the new regulations, update policies and procedures, ensure staff training, and comply with SEBI/IRDAI guidelines and the RBI's "Responsible Business Conduct" Directions, 2025.
**Customers of RRBs**
* **Impact:** Potential access to a wider range of financial products (mutual funds and insurance). Explicit disclosure of the fee-based nature of the service.
* **Action Required:** Be aware of the terms and conditions of the services offered, and utilize customer grievance redressal mechanisms if needed.
**Reserve Bank of India (RBI)**
* **Impact:** Enhanced regulatory framework for financial services offered by RRBs.
* **Action Required:** Oversee the implementation and compliance of these directions by RRBs.
Key Entities Referenced
Reserve Bank of India (Regional Rural Banks – Undertaking of Financial Services) Directions, 2025: The existing directions that this amendment modifies; the 'Master Direction'.
Reserve Bank of India (Regional Rural Banks – Undertaking of Financial Services) Amendment Directions, 2026: The primary subject: amendments to regulations for Regional Rural Banks regarding financial services.
Banking Regulation Act, 1949, Section 35A: Legal foundation providing the power for the Reserve Bank of India to issue the directions.
Regional Rural Banks (RRB): The financial institutions to which these directions apply.
Reserve Bank of India (Regional Rural Banks - Responsible Business Conduct) Directions, 2025: Directions pertaining to responsible business conduct for RRBs.
DOR.RAUG.AUT.REC.No. /24.01.041/2025-26 XX 2026
Draft Reserve Bank of India (Regional Rural 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
(Regional Rural 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 (Regional Rural Banks - Responsible Business Conduct) Directions, 2025.
3. Short Title and Commencement
(1) These Directions shall be called the Reserve Bank of India (Regional Rural 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 (Regional
Rural Banks – Undertaking of Financial Services) Directions, 2025 as under:
(i) For paragraph 18 of the Master Direction, the following shall be substituted,
namely:-
“18. An RRB is permitted to undertake the marketing of units of Mutual Funds as agent.
RRB may, with the approval of their Board, enter into agreement with Mutual Funds
for marketing their units, subject to the following terms and conditions:
(1) An RRB shall comply with the SEBI guidelines / regulations, including its code of
conduct, for distribution of mutual fund products.
(2) An RRB shall ensure that it is in full compliance with the instructions on Reserve
Bank of India (Regional Rural Banks - 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) An RRB shall confine retailing of units of Mutual Funds to branches.
(5) An RRB shall put in place adequate and effective control mechanisms.
(6) It shall be ensured that Mutual Funds whose products are being sold have robust
customer grievance redressal arrangements in place. The bank may facilitate the
redressal of grievances.
(7) Only such mutual fund products which are covered under the arrangement shall
be listed or displayed on websites or any other digital banking channels offered
by the RRBs.”
(ii) For paragraph 20 of the Master Direction, the following shall be substituted,
namely:-
“20. An RRB may take up corporate agency business for distribution of all types of
insurance products, including health and animal insurance, subject to the following
conditions:
(1) An RRB should comply with the Insurance Regulatory and Development
Authority of India (IRDAI) regulations for acting as 'composite corporate
agent'.
(2) An RRB shall ensure that it is in full compliance with the instructions on
Reserve Bank of India (Regional Rural Banks - 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 insurance companies whose products are being sold
have robust customer grievance redressal arrangements in place. The bank
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 banking channels
offered by the RRBs.”
(iii) In paragraph 23 of the Master Direction, the following shall be substituted under
sub-para (1), namely:-
2“(1) An RRB shall comply with the instructions on Reserve Bank of India (Regional
Rural 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 23 of the Master Direction stand deleted.
(v) Paragraph 25 of the Master Direction stands deleted.
(Manoranjan Padhy)
Chief General Manager
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