Reserve Bank of India (Regional Rural Banks – Undertaking of Financial Services) Directions, 2025 (Updated as on April 27, 2026)

1. Other business for RRBs

This document sets what other business the lender may take on.

2. In force at once

The rules took effect the day they were issued. There was no grace period.

3. Who is covered

These Directions apply to every regional rural bank.

1. Board clears fund selling

The Board must consider and approve any proposal to sell mutual fund units.

2. Board resolution for insurance

A Board resolution is needed before insurance agency work without risk begins.

3. Longer contract after the first

A longer contract may follow the first period, if the Board approves it.

4. Board policy on cards

A Board approved policy is needed before taking on card acquiring business.

5. Policy must cover funds

The investment policy must carry provisions on investing in such funds.

BankPulse example. A lender that has never invested in such a fund still needs the words in its investment policy. The policy must carry provisions governing its investments in a scheme of that kind. Writing them only when the first investment is proposed is too late.

6. Ten per cent alone

A lender alone cannot put more than ten per cent into an alternative investment fund.

7. Twenty per cent from all

All regulated lenders together cannot hold more than twenty per cent of a fund.

8. Subordinated units deducted

A holding in subordinated units of such a fund is deducted from capital in full.

BankPulse example. A lender puts ₹10 crore into such a fund, as subordinated units. The whole ₹10 crore comes off capital funds. It is taken proportionately from Tier-1 and Tier-2 capital.

9. Some funds are exempt

The Reserve Bank may exempt named funds from these rules by notification.

1. No promised return

Mutual fund units are bought at the customer's risk with no assured return.

2. Not from the market

The lender cannot buy such units on the secondary market or buy them back.

3. Customer holdings kept apart

The lender's own holdings must be kept separate from the customer's.

4. Sold only at branches

Retail selling of mutual fund units is confined to branches.

5. KYC rules still apply

The know your customer and money laundering rules apply to these applicants too.

6. Sponsor bank helps control

Control systems must be built in consultation with the sponsor bank.

7. Report the tie up

The tie up and a copy of the agreement must be reported to the Reserve Bank.

8. Customer joins by choice

A customer takes an insurance product only by choice, never by requirement.

9. Say it in the publicity

The voluntary nature of insurance must be stated plainly in all publicity.

10. No approval for agency work

Prior approval is not needed to take up insurance agency work without risk.

11. Fifteen days to report

Starting insurance agency business must be reported within fifteen days.

12. No forcing an insurer

The lender cannot compel a customer towards one insurance company.

13. Customer picks the insurer

The customer is free to choose his own insurer.

14. Written agreement needed

A formal agreement with the insurance company is needed for a referral.

15. Three year first agreement

The first referral agreement cannot run beyond three years.

16. No link to banking

There must be no link, direct or indirect, between banking service and insurance.

17. Risk stays outside

No risk from a referral arrangement may pass to the bank's own business.

18. No approval for referral

Prior approval is not needed to take up referral business.

19. Systems must be ready

Systems for building the application, safe transactions and complaints must exist.

20. Board approved complaints route

A complaints system approved by the Board must be in place.

21. No deposit restrictions

The bank must be under no Reserve Bank restriction on deposits or withdrawals.

22. No penalty in two years

The lender must not have been penalised in the last two financial years.

23. Fifteen days on card business

Starting card acquiring business must be reported within fifteen days.

1. Old rules stay repealed

Rules repealed before this document was issued remain repealed.

2. Past acts still stand

Anything done under the old rules is still judged by the old rules.

3. Old approvals carry over

Approvals given under the repealed rules are now read under these rules.

4. Added to other law

These rules sit on top of every other law and rule already in force.