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

Bank staff will no longer be able to mis-sell customers.

RBI Draft Rules for Mis-Selling: Keeping in mind the protection of customers' interests, the Reserve Bank of India (RBI) has issued new draft rules to tighten the noose on mis-selling by banks. This draft "RBI (Commercial Banks – Responsible Business Conduct) Amendment Direction 2026" released on Wednesday will come into effect from July 1, 2026. Under this draft, if it is proved that a bank has sold any product or service in the wrong manner, then the bank will have to refund the entire amount to the customer and also compensate for the loss 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 be permitted only 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 in any way. This means that incentive structures should not be focused solely on increasing sales, even if this 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 the marketing or sale of such products should not receive any incentives, directly or indirectly, from the third party concerned. Furthermore, a bank will not be permitted to forcibly tie-in a third-party product with its own offerings (tie-in sales). Customers will be given the right to choose freely from a range of options from different companies.

Why did 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 could mislead customers into unknowingly agreeing to a product or service. The draft mentions about a dozen such examples, with guidelines to avoid.

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.