The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Payments Banks – Undertaking of Financial Services) Directions, 2025 for public comments. These directions, issued under Section 35A of the Banking Regulation Act, 1949, aim to provide a comprehensive regulatory framework enabling Payments Banks (PBs) to undertake select financial services in a safe, transparent, and customer-centric manner. The seeks to streamline operations across various financial segments such as mutual funds, insurance, and agency or referral services, while ensuring consumer protection and sound risk management.
The directions mandate that all such activities be undertaken departmentally and subject to Board-approved policies addressing governance, risk mitigation, suitability, and grievance redressal mechanisms. Payments Banks are required to obtain prior approval of the RBI before engaging in any financial activity not explicitly covered in the Directions. Specific provisions require adherence to Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating Financing of Terrorism (CFT) norms, alongside compliance with sectoral regulations of SEBI, IRDAI, and PFRDA, as applicable. The Board must also ensure effective oversight of policies governing insurance distribution and agency business.
Further, the outlines detailed conditions for PBs to act as mutual fund distributors, insurance brokers, or corporate agents only on a non-risk sharing, fee-based model. It prohibits restrictive selling practices and mandates fair treatment of customers with clear disclosures on product suitability and voluntariness of purchase. Additionally, the framework introduces guidelines on referral services and overseas operations, ensuring prudence and regulatory harmony. Overall, the aims to expand the financial inclusion role of Payments Banks while safeguarding consumer interests and systemic stability.
These Directions shall come into force with immediate effect.
[Notification No. RBI/DOR/2025-26/208 DOR.AUT.REC.No.127/24-01-041/2025-26]
