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RBI New Rules: According to the new rules, banks and other financial institutions will maintain transparency and accountability when advertising, marketing, or selling any financial product or service.

RBI Draft Rules for Mis-Selling: The Reserve Bank of India (RBI) has issued new draft rules to crack down on mis-selling by banks, protecting the interests of customers. This draft, "RBI (Commercial Banks – Responsible Business Conduct) Amendment Directions 2026," released on Wednesday, will come into effect from July 1, 2026. Under this draft, if a bank is proven to have mis-sold a product or service, the bank will be required to refund the full amount to the customer and compensate for any losses incurred.

What is the new rule?

According to the new rules, banks and other financial institutions will maintain transparency and accountability when advertising, marketing, or selling any financial product or service. Explicit consent will be required before contacting customers, and contact will only be permitted during office hours. The RBI also stated that banks' internal policies should not encourage employees or direct selling agents (DSAs) to engage in mis-selling. This means that the incentive structure should not be focused solely on increasing sales, even if it is not in the customer's best interest.

The central bank has also taken a particularly strict stance regarding the sale of third-party products and services. The draft states that employees involved in marketing or selling such products should not receive any incentives, directly or indirectly, from the respective third party. Furthermore, a bank will not be permitted to forcibly link its own products with any third-party product (tie-in sales). Customers will be given the right to freely choose from a variety of options.

Why did the RBI issue the draft?

The RBI has also proposed that banks' digital platforms and apps should not use any "dark patterns." Dark patterns are designs or techniques that can mislead customers and force them to unknowingly agree to a product or service. The draft cites nearly a dozen such examples, with guidelines to avoid them.

In recent years, complaints of banks and financial institutions mis-selling insurance, investment plans, or other products have increased. In response, RBI Governor Sanjay Malhotra announced new regulations to curb mis-selling. This draft has been issued as part of this effort. The RBI has sought suggestions and objections from the public and stakeholders on this draft until March 4th.