RBI mis-selling ban banks 2026: According to the new rules, banks and other financial institutions will maintain transparency and accountability while advertising, marketing or selling any financial product or service.
RBI draft rules: Bank employees can no longer indulge in mis-selling
The Reserve Bank of India (RBI) has issued new draft rules to curb mis-selling by banks and protect customer interests. Released on Wednesday, the draft, "RBI (Commercial Banks – Responsible Business Conduct) Amendment Directions 2026," will come into effect from July 1, 2026. Under this draft, if a bank is found to be mis-selling a product or service, it will be required to refund the full amount to the customer and compensate for any losses incurred.
What is the new rule?
Under 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 the customer, and contact will be allowed 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 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 the marketing or sale of such products should not receive any incentives, directly or indirectly, from the respective third party. Furthermore, no bank will be allowed to forcibly link third-party products with its own products (tie-in sales). Customers will be given the right to choose between options from different companies.
Why did the RBI issue the draft?
The RBI 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 lists nearly a dozen examples of these practices, with advice to avoid.
In recent years, complaints of mis-selling of insurance, investment plans, or other products by banks and financial institutions have increased. In response, RBI Governor Sanjay Malhotra announced new regulations to prevent mis-selling. This draft has been released as part of this effort. The RBI has sought suggestions and objections from the public and stakeholders until March 4.
