If you sell a third party's product as their agent, it must be on a fee basis with no risk participation, disclosed upfront, and limited to regulated products. If you only refer customers to one, you must not sell, must not put your brand on their documents, must not build their journey into your app. Just introduce and redirect. Effective 1 January 2027.
This Third Amendment to the Undertaking of Financial Services (UFS) Directions, 2025 reworks two definitions and the operative rules for agency business and referral services, while the customer-facing conduct rules move across to the Responsible Business Conduct amendment. This decode states the rules in plain terms and cites the Commercial Banks numbering (paragraphs 4, 52, 58, 62) as the worked reference.
Who it applies to
The same amendment was issued, on 15 June 2026, to seven regulated-entity classes, each amending that class's own Undertaking of Financial Services Directions, 2025:
- Commercial Banks, Small Finance Banks and Payments Banks.
- Regional Rural Banks, Urban Co-operative Banks and Rural Co-operative Banks.
- NBFCs, where the same agency redraw applies, with insurance distribution conditions at paragraph 32 of the NBFC UFS Directions.
What it requires
Grouped by what each obligation is about. Described in plain terms; verify the exact clause text against the source before acting.
Agency business (Para 4(1), 58)
Agent, not risk-taker
Agency business means acting as agent of a third-party provider (TPPSP) without risk participation, to facilitate the sale of their financial products (insurance, mutual fund, pension and the like) to your own customers. It must be on a fee basis with no risk participation, explicitly disclosed upfront to customers.
Regulated products only, listed transparently
You may deal only with regulated financial products and services you are permitted to deal in under Section 6(1) of the Banking Regulation Act; only products covered by the arrangement may be listed or displayed on your website, app or other digital channels.
A written agreement + provider grievance redressal
Enter an agreement with the TPPSP for the sale of only regulated products, ensure the provider has robust customer-grievance-redressal arrangements (the entity may facilitate redressal), and remain in full compliance with the Responsible Business Conduct Directions, 2025. A bank may also act as an insurance broker departmentally (Para 52), subject to these agency conditions.
Referral services (Para 4(17), 62)
Introduce only, never sell
Referral means making information about a TPPSP's products available to your customers. The role must be purely referral: you may market and refer, but not sell, under a referral arrangement, and you must make that explicitly clear upfront through a disclaimer. The route is open only where there is no continued customer interaction (distribution, grievance redressal, post-sale service).
Your brand off their documents
The entity's name or brand must not feature in any of the third party's product or service documents.
No embedded journeys, just a redirect
No third-party processes may be integrated into your platform, carried out on your premises (unless specifically permitted), or offered as a micro-site or micro-app: only an access link that redirects the customer to the TPPSP. The list of referral products must be published on your digital channels for transparency.
Diligence on who you refer
Select the TPPSP with proper due diligence for the reputational risk you take on, and ensure the provider has robust grievance-redressal arrangements.
What changed from the 2025 Directions
If your framework was built on the Undertaking of Financial Services Directions, 2025, these are the moves that matter:
- Agency Business and Referral Services are redefined (Para 4), and new definitions of Regulated financial products and services, TPPS and TPPSP are inserted.
- Customer-service and conduct instructions move out of the UFS Directions and are consolidated into the Responsible Business Conduct Directions, 2025.
- Several paragraphs are omitted (for Commercial Banks: Para 7(1) and (2), 8, 59 to 61), and 52, 58 and 62 are substituted with the agency/referral rules above.
- The referral route is now explicitly sale-free and brand-free, with embedded micro-sites/micro-apps ruled out: a meaningful tightening for digital distribution partnerships.
- Effective 1 January 2027.
What RBI has penalised on third-party distribution
This Amendment takes effect on 1 January 2027, so there is no enforcement under it yet. RBI has historically acted where banks blurred the agency/referral line: selling third-party products as their own, or carrying risk they were not meant to. As the tracker fills with FY-relevant actions, the ones citing these failures will appear here.
Background & lineage
Agency and referral arrangements are how regulated entities have long distributed insurance, mutual funds and pension products; this amendment sharpens the boundary.
- 2025RBI (Undertaking of Financial Services) Directions, 2025, issued entity-class-wise, with the original agency/referral framework.
- 15 Jun 2026UFS Amendment Directions, 2026: agency business & referral services redrawn across seven classes, issued with the RBC amendment; effective 1 Jan 2027.
The boundary lives in your processes
The agency/referral line is only as clean as the SOPs your branch and digital teams actually follow. Distribute the rule, prove it was acknowledged.