Rural Co-operative Banks Responsible Business Conduct Amendment Directions

RBI/2026-27/121 DOR.MCS.REC.No.100/01-01-038/2026-27 June 15, 2026

Reserve Bank of India (Rural Co-operative Banks - Responsible Business Conduct) Second Amendment Directions, 2026

It has been decided to issue comprehensive instructions on advertising, marketing and sale of financial products / services to all Rural Co-operative Banks (hereinafter referred to collectively as “RCBs” and individually as an “RCB”) under the Reserve Bank of India (Rural Co-operative Banks – Responsible Business Conduct) Directions, 2025.

2. In exercise of the powers conferred by Sections 35A and 56 of the Banking Regulation Act, 1949, 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 (Rural Co-operative Banks - 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 (Rural Co-operative Banks – Responsible Business Conduct) Directions, 2025 as under:

(1) In paragraph 4, the following definition shall be inserted after sub-paragraph 4(5), namely:

“4(5A) Compulsory bundling means the practice by an RCB 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 RCB.”

(2) In paragraph 4, the following definitions shall be inserted after sub-paragraph 4(9), namely:

“4(9.1A) 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.”

(3) In paragraph 4, the following definitions shall be inserted after sub-paragraph 4(9A), namely:

“4(9B) Direct Selling Agent (DSA) / Direct Marketing Agent (DMA) means an entity or individual (other than an RCB’s own employee) engaged by an RCB, irrespective of the contractual designation / nomenclature used for such engagement (such as Business Correspondent (BC), Loan Service Provider (LSP), etc.), to sell or market / promote / influence customers for purchase of its own or third-party product / service.

4(9C) DSA / DMA sub-agent means an individual, engaged by a DSA / DMA, who is involved in selling / marketing related activities, on behalf of an RCB, at the point of customer interface.

Explanation: Wherever an individual is directly engaged by an RCB 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.”

(4) In paragraph 4, the following definition shall be inserted after sub-paragraph 4(12), namely:

“4(12A) 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 RCB.”

(5) In paragraph 4, the following definition shall be inserted after sub-paragraph 4(19), namely:

“4(19A) 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.”

(6) In paragraph 4, the following definition shall be inserted after sub-paragraph 4(25), namely:

“4(25A) Third-party Product or Service (TPPS) means a product or service offered by an RCB 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 (Rural Co-operative Banks – Undertaking of Financial Services) Directions, 2025.”

(7) In Chapter IV on ‘Customer Guidance and Protection’, the following section and paragraphs shall be inserted after paragraph 79, namely:

“E. Advertising, Marketing and Sale of Financial Products / Services by RCBs

E.1 Policy

79A. An RCB 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.

79B. An RCB, 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 / penal actions to be taken in case of non-compliant DSAs / DMAs.

E.2 Engagement of DSAs / DMAs

79C. An RCB, 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 RCB shall update the list within seven calendar days of any modification to the list.

79D. An RCB 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.

79E. For the benefit of the customers, any DSA / DMA sub-agent or representative of a TPPS Provider, who is present within the RCB’s premises for sale / marketing of the RCB’s own or third-party financial product / service, shall be distinguishable from the employees of the RCB, including clear ‘on person’ identification.

79F. An RCB, 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 RCB’s own employees, DSAs / DMAs and their sub-agents as well as representatives of any TPPS Provider deployed for the purpose in the RCB’s premises. Prior to assigning any sale / marketing related activities on its behalf, the RCB shall obtain an undertaking from DSAs / DMAs that they and their sub-agents agree to abide by the Code of Conduct. The RCB 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 RCB 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 RCB’s Code of Conduct. The RCB shall display the Code of Conduct on its website for reference by public.