RBI’s 2026 Amendments on Payments Banks’ Agency and Referral Activities: Detailed Analysis

The Reserve Bank of India has notified the Reserve Bank of India (Payments Banks — Undertaking of Financial Services) Amendment Directions, 2026, substantially reshaping how Payments Banks can engage in selling and referring third-party financial products. These changes, framed under powers granted by Section 35A of the Banking Regulation Act, 1949, will take effect from 01 January 2027.

These Amendment Directions modify the existing Reserve Bank of India (Payments Banks — Undertaking of Financial Services) Directions, 2025 (referred to as the “Master Direction”) and realign them with the upcoming Reserve Bank of India (Payments Banks – Responsible Business Conduct) Directions, 2025. The focus is on customer protection, clear role demarcation, stronger governance of third-party arrangements, and ensuring that Payments Banks stay within their permitted business perimeter.

This article provides a structured, practitioner-focused walkthrough of the amendments so that assessee and compliance teams in Payments Banks can prepare their systems, documentation, and governance processes well before the 2027 implementation date.

Effective Date
The Reserve Bank of India (Payments Banks ­Undertaking of Financial Services) Amendment Directions, 2026 will be operational from 01 January 2027.

1.1 Statutory authority

The Reserve Bank of India has invoked its powers under Section 35A of the Banking Regulation Act, 1949 to amend the 2025 Master Direction governing financial services undertaken by Payments Banks. The Reserve Bank has recorded its satisfaction that such changes are necessary and expedient in the public interest, particularly given the rapid expansion of digital distribution of financial products through Payments Banks.

1.2 Policy intent

While the full customer-conduct framework is being consolidated into the Reserve Bank of India (Payments Banks – Responsible Business Conduct) Directions, 2025, these 2026 Amendment Directions specifically aim to:

  • Clarify the meaning and scope of “Agency Business” and “Referral Services”;
  • Limit Payments Banks to regulated financial products and services which they are permitted to handle under Section 6(1)(a) to (m) and (o) of the Banking Regulation Act, 1949;
  • Ensure that all agency arrangements remain on a fee-based, non-risk-participation basis;
  • Mandate strong grievance redressal systems at the level of Third-party Product and Service Providers (TPPSP);
  • Clearly separate referral-only activities (where the bank does not sell) from agency-based distribution (where the bank facilitates the sale); and
  • Reduce reputational and consumer protection risks that may arise from Payments Banks’ association with third-party entities.

2. Revised Definitions and Key Concepts

The first major block of changes appears in paragraph 4 of the Master Direction.