The Reserve Bank of India (RBI) has released draft amendments strengthening Responsible Business Conduct and agency business norms for Rural Co-operative Banks (RCBs), aimed at enhancing customer protection and transparency.
Under the proposed framework, effective July 1, 2026, RCBs must obtain explicit and documented customer consent for each product sold and are barred from compulsory bundling of products or services. The draft prohibits mis-selling and the deployment of deceptive digital practices, while mandating suitability and appropriateness assessment before any sale.
RCBs will be required to use separate application forms for different products, ensure clear disclosure of interest rates and fees, and regulate Direct Selling and Marketing Agents through proper due diligence, monitoring and a defined code of conduct. Where mis-selling is established, banks must refund the full amount collected and compensate customers for any resultant loss, in accordance with their approved policy.
Under amendments to the Undertaking of Financial Services Directions, effective April 1, 2026, RCBs may undertake agency and referral business strictly on a fee basis without risk participation. Insurance referral arrangements must comply with IRDAI regulations, and only products covered under formal arrangements may be displayed on digital platforms.
The RBI has sought stakeholder feedback on the draft directions by March 4, 2026.
