Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Second Amendment Directions, 2026

RBI/2026-27/123
DOR.MCS.REC.No.102/01-01-039/2026-27
June 15, 2026

Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Second Amendment Directions, 2026

Certain instructions on customer appropriateness and suitability and other related matters have been issued to NBFCs under the Reserve Bank of India (Non-Banking Financial Companies – Undertaking of Financial Services) Directions, 2025. The extant instructions have since been reviewed and it has been decided to issue comprehensive instructions on advertising, marketing and sale of financial products / services to all NBFCs, excluding Core Investment Companies, NBFC-Account Aggregators, Non-Operative Financial Holding Companies, and NBFCs not having any customer interface, (hereinafter referred to collectively as “NBFCs” and individually as an “NBFC”) under the Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025.

2. In exercise of the powers conferred by Sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934, the Reserve Bank, being satisfied that it is necessary and expedient in public interest so to do, hereby issues the Amendment Directions hereinafter specified.

3. Short Title and Commencement
   (1) These Directions shall be called the Reserve Bank of India (Non-Banking Financial Companies - Responsible Business Conduct) Second Amendment Directions, 2026.
   (2) These Directions shall come into effect from January 1, 2027.

4. These Amendment Directions shall modify the Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025 as under:

(1) A new paragraph shall be inserted after paragraph 4, namely:
“
4A. The provisions contained in Chapter IIIA shall be additionally applicable to:
(1) NBFC-P2P registered with the RBI under the provisions of the RBI Act, 1934;
(2) Mortgage Guarantee Company registered with the RBI under the scheme of Registration of Mortgage Guarantee Companies;
(3) Standalone Primary Dealer registered with the RBI as NBFC under the provisions of the RBI Act, 1934.”

(2) In paragraph 5, the sub-paragraphs 5(1) and 5(4) shall be deleted.

(3) In paragraph 6, the following definition shall be inserted after sub-paragraph 6(1), namely:
“
6(1A) Compulsory bundling means the practice by an NBFC of making availment of one product / service by a customer conditional upon availment of another product / service, whether own or third-party, offered by the NBFC.”

(4) In paragraph 6, the following definitions shall be inserted after sub-paragraph 6(2), namely:
“
6(2A) Dark pattern means any practices or deceptive design pattern using user interface or user experience interactions on any platform that is designed to mislead or trick users to do something they originally did not intend or want to do, by subverting or impairing the consumer autonomy, decision making or choice, amounting to misleading advertisement or unfair trade practice or violation of consumer rights.
6(2B) Direct Selling Agent (DSA) / Direct Marketing Agent (DMA) means an entity or individual (other than an NBFC’s own employee) engaged by an NBFC, irrespective of the contractual designation / nomenclature used for such engagement (such as Loan Service Provider (LSP), etc.), to sell or market / promote / influence customers for purchase of its own or third-party product / service.
6(2C) DSA / DMA sub-agent means an individual, engaged by a DSA / DMA, who is involved in selling / marketing related activities, on behalf of an NBFC, at the point of customer interface.
Explanation: Wherever an individual is directly engaged by an NBFC under an outsourcing arrangement for selling / marketing related activities, instructions applicable to DSA / DMA as well as DSA / DMA sub-agent shall apply to such an individual.”

(5) In paragraph 6, the following definition shall be inserted after sub-paragraph 6(4), namely:
“
6(4A) Explicit consent means a specific, informed and unambiguous indication of an individual’s choice, given through a duly recorded / documented statement or clear affirmative action, which indicates agreement to a specific action by or arrangement with an NBFC.”

(6) In paragraph 6, the following definition shall be inserted after sub-paragraph 6(9), namely:
“
6(9A) Mis-selling means sale of a financial product / service, whether own or third party, in the following cases:
(i) Sale of a product / service, which is neither suitable nor appropriate in view of the customer’s profile evaluated at the time of sale, notwithstanding her / his explicit consent; or
(ii) Sale of a product / service without providing correct or complete information or by giving misleading information; or
(iii) Sale of a product / service without customer’s explicit consent; or
(iv) Compulsory bundling of another product / service with sale of the requested product / service; or
(v) Sale of a product / service involving any other element defined by the financial sector regulator concerned as mis-selling.”

(7) In paragraph 6, the following definition shall be inserted after sub-paragraph 6(12), namely:
“
6(13) Third-party Product or Service (TPPS) means a product or service offered by an NBFC to its customers on behalf of a third-party product / service provider (TPPS Provider) after entering into an agency business or referral services arrangement with the TPPS Provider as permitted under Reserve Bank of India (Non-Banking Financial Companies – Undertaking of Financial Services) Directions, 2025.”

(8) In Chapter II on ‘Institutional Framework’, the sub-paragraph 7(8) shall stand modified as ‘Code of Conduct for Recovery Agents’.

(9) In Chapter III on ‘Responsible Lending Conduct’, the Section I shall stand modified as ‘Responsibilities of Recovery Agents of the NBFC’.

(10) For paragraphs 98 and 99, the following shall be substituted, namely:
“
98. The NBFC shall ensure that the Recovery Agents are properly trained to handle their responsibilities with care and sensitivity, particularly aspects such as soliciting customers, hours of calling, privacy of customer information and conveying the correct terms and conditions of the products on offer, etc.
99. The NBFC shall obtain the undertaking of Recovery Agents to abide by the code of conduct. In addition, Recovery Agents shall adhere to extant instructions on Fair Practices Code for NBFCs as also its own code for collection of dues and repossession of security. It is essential that the Recovery Agents refrain from action that could damage the integrity and reputation of the NBFC and that they observe strict customer confidentiality.”

(11) Paragraph 101 shall be deleted.

(12) After Chapter III on ‘Responsible Lending Conduct’, a new chapter shall be inserted as under:

“Chapter IIIA - Advertising, Marketing and Sale of Financial Products / Services by NBFCs

A. Policy
101A. An NBFC shall put in place a comprehensive policy for advertising, marketing and sale of its own as well as third-party financial products / services, which shall, amongst others, cover aspects related to criteria for determination of suitability and appropriateness of products / services offered to customers, feedback mechanism, customer compensation in cases of mis-selling, etc.
101B. An NBFC, availing the services of DSAs / DMAs, shall also include in its policy, aspects related to their eligibility criteria, due diligence at the pre and post-engagement level, training of DSA / DMA sub-agents, functions / activities that may be assigned, performance evaluation standards, inspection / audit, control mechanisms to ensure compliance with statutory requirements along with procedures to be followed and penal actions to be taken in case of non-compliant DSAs / DMAs.

B. Engagement of DSAs / DMAs
101C. An NBFC, availing the services of DSAs / DMAs for sale / marketing of its own or third-party financial products / services, shall maintain and display an up-to-date list of DSAs / DMAs empanelled / engaged with it on its website for reference by the members of public. Such list shall include the name and other details of the DSAs / DMAs such as type (corporate / individual), address, the period of engagement, and products / services they deal with. The NBFC shall update the list within seven calendar days of any modification to the list.
101D. An NBFC shall ensure that its employees or DSA / DMA sub-agents engaged in the sale of own or third-party financial products / services possess the requisite qualification / certification, if any, prescribed by the respective financial sector regulators.
101E. For the benefit of the customers, any DSA / DMA sub-agent or representative of a TPPS Provider, who is present within the NBFC’s premises for sale / marketing of the NBFC’s own or third-party financial product / service, shall be distinguishable from the employees of the NBFC, including clear ‘on person’ identification.
101F. An NBFC, based on the instructions mentioned in these Directions, shall put in place a Code of Conduct for sale and marketing of financial products / services, which shall be applicable to the NBFC’s own employees, DSAs / DMAs and their sub-agents as well as representatives of any TPPS Provider deployed for the purpose in the NBFC’s premises. Prior to assigning any sale / marketing related activities on its behalf, the NBFC shall obtain an undertaking from DSAs / DMAs that they and their sub-agents agree to abide by the Code of Conduct. The NBFC shall obtain a similar undertaking from its own employees and representatives of TPPS Provider to whom the Code of Conduct is applicable. The agreement entered between the NBFC and any DSA / DMA shall cover the penal / disciplinary action to be taken in case the DSA / DMA and / or its sub-agents are found to be in violation of the NBFC’s Code of Conduct. The NBFC shall display the Code of Conduct on its website for reference by public.