The Reserve Bank of India (RBI) on Wednesday issued draft amendment directions aimed at strengthening regulations governing the advertising, marketing and sale of financial products and services by regulated entities, including banks and non-banking financial companies (NBFCs).

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The RBI said it has decided to introduce comprehensive guidelines covering advertising, marketing and sales practices for all banks and NBFCs. The proposed framework will also apply to third-party financial products and services. The draft amendments, issued pursuant to the announcement made in the Monetary Policy Committee (MPC) meeting, seek to modify existing "Responsible Business Conduct" directions across a wide range of regulated entities. These include commercial banks, small finance banks, payments banks, local area banks, regional rural banks, urban and rural co-operative banks, All India Financial Institutions, NBFCs, and housing finance companies.

Key Provisions to Enhance Customer Protection

The draft amendment directions aim at strengthening customer protection norms and curbing mis-selling, compulsory bundling, and deceptive digital practices.

Prohibition on Compulsory Bundling

A key highlight of the draft directions is a clear prohibition on "compulsory bundling," defined as making the availability of one product or service conditional upon the purchase of another, whether offered by the bank itself or a third party.

Defining and Penalizing Mis-selling

The RBI has also introduced a detailed definition of "mis-selling," covering instances such as selling products unsuitable for a customer's profile, providing misleading or incomplete information, selling products without explicit consent, and forcing bundled purchases. In cases where mis-selling is established, banks will be required to refund the entire amount paid by the customer and compensate for any loss arising from the transaction, it said.

Mandate for Explicit Consent

The draft mandates that banks obtain explicit consent, defined as a specific, informed, and unambiguous indication of agreement before selling any product or service. It mentioned that the consent for multiple products cannot be clubbed together, and user interfaces must ensure customers review applicable terms and conditions before granting consent. Further, banks cannot fund the purchase of products from loan proceeds without explicit consent.

Tackling Deceptive 'Dark Patterns'

In a significant move targeting digital conduct, the RBI has formally defined and prohibited the use of "dark patterns", deceptive user interface designs that mislead or trick customers into unintended actions.

Regulations for Agents and Marketing Communication

The RBI has also introduced detailed norms governing Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs). Further, telemarketing calls or visits must generally be made between 9:00 a.m. and 6:00 p.m., unless specifically authorized by the customer, the RBI draft guidelines said.

Public Feedback Invited

The comments/feedback on the draft Amendment Directions may be submitted by the regulated entities and members of public/other stakeholders on or before March 4, 2026, RBI said in its press release. (ANI)