The Reserve Bank of India (RBI) on Wednesday issued draft guidelines aimed at curbing mis-selling of financial products by banks, tightening norms on advertising, marketing and sales practices.
It has outlined measures to ban “dark patterns” in advertising and overhaul sales conduct, with definitions for mis-selling, customer consent, product bundling and roles of third-party providers.
The RBI has asked banks to formulate a comprehensive policy for advertising, marketing and sales of its own as well as third-party financial products or services. The policy should cover suitability and appropriateness of products offered, the feedback mechanism, and customer compensation in cases of mis-selling.
The proposal follows announcements made by the RBI governor in the latest monetary policy review. New guidelines will come into effect from July 1, 2026. Stakeholders can submit their feedback by March 4.
Banks must ensure that their policies do not offer any incentives to its employees or others to push a product. The regulator has mandated banks not to sell any third-party product with its own products.
Banks must establish a mechanism to receive customer feedback within 30 days of any product sale to confirm understanding of features and risks. If mis-selling is confirmed, banks should fully refund the purchase, notify the customer of cancellation, and compensate for losses as per the approved policy.
If banks are availing of services of direct selling agents or direct marketing agents, they should be included in the policy.
Banks must secure explicit customer consent before offering or selling any products or services and assess suitability for the customer by analysing its features, risks/returns, horizon, complexity, and fees against the customer’s age, income, financial literacy, and risk tolerance, the draft said.
The regulator has also outlined strict norms for bank employees or other agents, allowing telephonic calls or customer visits only between 9 a.m and 6 p.m.