UCBs must disclose commissions on mutual fund/insurance sales
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2009-10/245 · issued 03 Dec 2009 · ~2 min read
Quick answerRBI now mandates Urban Cooperative Banks to disclose all commissions and fees received from mutual fund and insurance companies when marketing their products to customers. This applies immediately to all UCBs engaged in such distribution activities.
What changed
Previously, UCBs were allowed to market mutual fund and insurance products as agents or on a referral basis without risk participation. Now, RBI has added a transparency requirement: banks must disclose to customers the full details of any commissions or other fees received from product providers.
What it means for you
UCBs can no longer keep commission structures hidden from customers. This levels the playing field and ensures customers can make informed choices. Banks will need to update their disclosure processes and train staff to communicate these details clearly during product sales.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Immediately update customer-facing documentation and sales scripts to include mandatory disclosure of all commissions and fees received from mutual fund/insurance companies.
Train frontline staff and relationship managers on the new disclosure requirement and ensure they can explain commission details to customers.
Review existing agency and referral agreements with mutual fund and insurance partners to capture commission/fee data for disclosure.
Set up internal audit checks to verify compliance with the disclosure mandate during product marketing activities.
Who it affects
All Primary (Urban) Cooperative Banks, UCB customers purchasing mutual fund or insurance products through their bank, Mutual fund and insurance companies partnering with UCBs for distribution
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-19 08:01 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Does this circular apply to all types of insurance and mutual fund products marketed by UCBs?
Yes, the disclosure requirement covers all insurance and mutual fund products that UCBs market or refer to customers, as per the earlier permissions granted in 2003, 2006, and 2007 circulars.
What exactly must be disclosed to the customer?
Banks must disclose details of all commissions and other fees (in any form) received from the mutual fund or insurance company for marketing or referring their products. The disclosure should be made to the customer at the time of sale.
When does this requirement come into effect?
The instructions are effective immediately from the date of the circular, December 3, 2009. No transition period was provided.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1777: UBD.No.BPD.PCB.26/09.11.200/2009-10 — "Marketing / Distribution of Mutual Fund / Insurance Products by Urban Cooperative Banks" dated December 3, 2009”
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/245
UBD.No.BPD.PCB.26/09.11.200/2009-10
December 3, 2009
Chief Executive Officer
All Primary (Urban) Cooperative Banks
Dear Sir / Madam,
Marketing/Distribution of Mutual Fund/Insurance Products by Urban Cooperative Banks
Please refer to our circulars UBD.No.BPD.PCB.Cir9/09.11.200/2003-04 dated August 18, 2003 and UBD.PCB. Cir.No.42/09.11.200/2006-07 dated May 7, 2007 permitting Urban Cooperative Banks (UCBs) to undertake insurance business as corporate agent and/or on referral basis without risk participation subject to fulfilment of certain conditions. UCBs have been advised to sell insurance products to the bank’s customers with adequate disclosure and transparency and they should not adopt any restrictive practice of forcing its customers to go in only for a particular insurance company in respect of products marketed by the bank. The customers should be allowed to exercise their own choice.
2. UCBs have also been allowed vide circular UBD.BPD(PCB)Cir No.44/09.18.100/2005-06 dated April 13, 2006 to market units of Mutual Funds as agents.
3. In conducting the activities referred to above, it is likely that banks may be marketing / referring, several competing products of various mutual fund / insurance companies to their customers. Keeping in view the need for transparency in the interest of the customers to whom the products are being marketed / referred, it has since been decided that banks should disclose to the customers, details of all the commissions / other fees (in any form) received, if any, from the various mutual fund / insurance companies for marketing / referring their products.
4. The above instructions will come into force with immediate effect.
Yours faithfully
(A.K. Khound)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/245 · issued 03 Dec 2009. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5399&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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