Draft Reserve Bank of India (Rural Co-operative Banks – Undertaking of Financial Services) Amendment Directions, 2026

**Executive Summary** The Reserve Bank of India (RBI) has issued Amendment Directions for 2026 regarding Rural Co-operative Banks (RCBs) undertaking financial services. These directions amend the existing Master Direction of 2025 and consolidate regulatory instructions on customer service and conduct. The directions come into effect on April 1, 2026, requiring RCBs to ensure full compliance with specified instructions. **Key Points / Main Content** * **Amendment Title:** Reserve Bank of India (Rural Co-operative Banks - Undertaking of Financial Services) Amendment Directions, 2026. * **Effective Date:** April 1, 2026. * **Purpose:** To amend extant regulations governing agency business and referral services and to consolidate regulatory instructions on customer service and conduct aspects for RCBs. * **Amendments to Master Direction (2025):** * Deletion of sub-para 10 of paragraph 15. * Insertion after para 21: * RCBs must fully comply with the Reserve Bank of India (Rural Co-operative Banks - Responsible Business Conduct) Directions, 2025. * Business must be undertaken on a fee basis without risk participation, which must be explicitly disclosed upfront to customers. * Insurance companies whose products are sold must have robust customer grievance redressal arrangements. The bank may facilitate the redressal of grievances. * Only insurance products covered under the arrangement should be listed or displayed on websites or digital banking channels offered by RCBs. * Amendment to paragraph 26: * Substitution of sub-para (1) to ensure RCBs comply with Reserve Bank of India (Rural Co-operative Banks - Responsible Business Conduct) Directions, 2025 and relevant IRDAI regulations. * Deletion of sub-paras (2) and (6) of paragraph 26. **Impact Analysis** **Rural Co-operative Banks (RCBs)** * **Impact:** RCBs will need to modify their practices related to undertaking financial services, especially regarding agency business, referral services, and insurance product offerings. They must ensure compliance with new guidelines on risk participation, disclosure, and grievance redressal. * **Action Required:** Review and update operational procedures, customer disclosures, and staff training to align with the amended directions. They must ensure compliance with the Reserve Bank of India (Rural Co-operative Banks - Responsible Business Conduct) Directions, 2025 and relevant IRDAI regulations, especially regarding referral arrangements with insurance companies. **Customers of RCBs** * **Impact:** Customers will benefit from greater transparency in fee structures and improved grievance redressal mechanisms when purchasing insurance products through RCBs. * **Action Required:** No immediate action is required, but customers should be aware of the new disclosure requirements regarding fees and the availability of robust grievance redressal mechanisms for insurance products. **Insurance Companies partnered with RCBs** * **Impact:** Insurance companies will need to ensure that they have robust customer grievance redressal arrangements in place. * **Action Required:** Ensure that the insurance companies are implementing appropriate grievance redressal systems.

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