**Executive Summary**
The Reserve Bank of India issued amendment directions to the Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Directions, 2025, effective from December 05, 2025. These amendments modify the existing Master Direction and address feedback received from stakeholders. The changes primarily involve the definitions and scope of "Agency Business" and "Referral Services" within the Payments Banks framework.
**Key Points / Main Content**
* **Effective Date:** December 05, 2025
* **Purpose:** To amend the Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Directions, 2025, referred to as the 'Master Direction.'
* **Amendments to Paragraph 4 of the Master Direction:**
* **Agency Business Definition:** Sub-para (1) is substituted to define "Agency Business" as an arrangement where a bank acts as an agent for a third-party product or service provider (TPPSP) without risk participation, facilitating the sale of financial products (e.g., insurance, mutual funds, pension funds) to its customers. The bank must enter into an agreement with the TPPSP for the sale of regulated financial products or services. Agency business activities include marketing, sales, promotion, the initial point of contact for grievance redressal, and after-sale services.
* **Financial Services Company Renumbering:** The existing sub-para (1) defining "Financial Services Company" is renumbered as (1A).
* **Referral Services Definition:** Sub-para (3) is substituted to define "Referral Services" as an arrangement where a bank refers its customers to a TPPSP by providing information about the TPPSP's financial products or services. The bank should not be involved in any of the processes relating to the third-party products or services. The bank's name or brand should not feature in any product/service documents. TPPS processes should not be integrated with the bank's platform, carried out within the bank's premises (unless specifically permitted), or be accessible via a micro-site or application, except for an access link to redirect the customer to the TPPSP.
**Impact Analysis**
**Payments Banks**
* **Impact:** Must adhere to the revised definitions and guidelines for "Agency Business" and "Referral Services" when offering or facilitating the sale of third-party financial products. Banks will need to adjust their processes to align with the new stipulations, including establishing agreements with TPPSPs, ensuring no risk participation in agency business, and maintaining separation in referral service arrangements.
* **Action Required:** Review and update their policies, procedures, and agreements related to Agency Business and Referral Services to comply with the amended directions. Implement changes to systems and processes to ensure separation and transparency in referral services.
**Third-Party Product or Service Providers (TPPSPs)**
* **Impact:** TPPSPs offering financial products or services through Payments Banks must comply with the new definition of "Agency Business" and "Referral Services"
* **Action Required:** Review agreements with Payment Banks to ensure they align with the amended directions, particularly regarding risk participation in agency business and the separation of branding and processes in referral services.
**Customers of Payments Banks**
* **Impact:** Customers who utilize Payments Banks for agency or referral services will be affected by the changes in the services.
* **Action Required:** Review the updated policies on how Payment Banks provide services.
Key Entities Referenced
Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Directions, 2025: The primary directive being amended, setting guidelines for Payments Banks undertaking financial services.
Section 35A of the Banking Regulation Act, 1949: The legal basis granting powers to the Reserve Bank of India to issue the amendment directions.
Reserve Bank of India: The issuing regulatory authority for the directions and amendment.
Financial Services provided by Banks in 2016: The directions which were issued in 2016 and replaced by the 2025 Master Directions.
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
RBI/DOR/2025-26/137
DOR.RAUG.AUT.REC.No.345/24.01.041/2025-26 December 05, 2025
Reserve Bank of India (Payments Banks – Undertaking of Financial Services)
(Amendment) Directions, 2025
Reserve Bank had earlier issued directions on Financial Services provided by Banks
in 2016, since replaced by entity-wise Master Directions issued on November 28, 2025
- Reserve Bank of India (Payments Banks – Undertaking of Financial Services)
Directions, 2025. A review of some provisions contained in the earlier instructions was
carried out and a draft direction was placed on the website on October 04, 2024.
2. Taking into account the feedback received and consultation held with the
stakeholders and in exercise of the powers conferred by Section 35A of the Banking
Regulation Act, 1949, and all other laws enabling the Reserve Bank in this regard, the
Reserve Bank being satisfied that it is necessary and expedient in the public interest
so to do, hereby issues the Amendment Directions hereinafter specified.
3. These Directions shall be called the Reserve Bank of India (Payments Banks –
Undertaking of Financial Services) (Amendment) Directions, 2025.
4. The provisions shall come into effect from December 05, 2025.
5. These Amendment Directions modify the Reserve Bank of India (Payments Banks
- Undertaking of Financial Services) Directions, 2025 (hereinafter referred to as
‘Master Direction’) as under:
(i) In paragraph 4 of the Master Direction, the following sub-paras shall be
inserted/substituted as follows:
a) in sub-para (1), the following shall be substituted, namely: -
“Agency Business: means an arrangement under which a bank acts as an agent
of a third-party product or service provider (TPPSP), without risk participation, to
facilitate the sale of the latter’s financial products or services (e.g., insurance,
mutual fund, pension fund, etc.) to its own customers. Under agency businessarrangement, the bank shall enter into an agreement with a TPPSP for sale of only
regulated financial products or services. The activities covered under agency
business arrangements may inter-alia include marketing, sales, promotion, initial
point of contact for redressal of grievance and other after-sale services related to
the product or service.”
b) the existing sub-para (1) in the Master Direction, which defines Financial
Services Company, has been renumbered as (1A).
c) for sub-para (3), the following shall be substituted, namely: -
“Referral Services: means an arrangement under which a bank may refer its
customers to a TPPSP by making available information about the financial products
or services offered by the TPPSP.
Note: Under referral arrangement, the bank shall neither be involved in any of the
processes relating to the third-party products or services (TPPS) nor the name or
brand of the bank shall feature in any of the product/service documents. No
processes relating to TPPS shall either be integrated with the bank’s
platform/carried out within the premises of the bank (unless specifically permitted)
or be accessible in the form of a micro-site or micro-application, except for an
access link to redirect the customer to the TPPSP.”
(Manoranjan Padhy)
Chief General Manager
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