The Reserve Bank of India (RBI) has proposed a significant overhaul in the way banks and financial institutions sell products and services to customers — part of a broader effort to strengthen consumer rights and enhance fairness in India’s financial sector. This development marks one of the most notable regulatory shifts in recent years, aiming to hold lenders more accountable and protect customers from deceptive practices. 

Stronger Definition of Mis-Selling

Under the newly proposed draft known as the Responsible Business Conduct Amendment Directions, 2026, the RBI has redefined mis-selling to include cases where a product or service is unsuitable for a customer even if they gave explicit consent. This means that simply signing a form will no longer be enough for a bank to justify the sale of financial products that do not align with a customer’s age, income, financial literacy, or risk profile. 

Mandatory Full Refund and Compensation

A cornerstone of the draft rules is the requirement for banks to refund the entire amount paid by a customer if a product or service is found to have been mis-sold. In addition to a full refund, lenders must also compensate customers for any losses that resulted from the mis-selling. This dual-layer protection aims to restore both the financial and trust loss customers often face in such situations. 

Ban on Dark Patterns and Forced Bundling

RBI’s proposal goes beyond traditional sales practices and directly targets modern digital marketing tactics. So-called dark patterns — design elements in apps or websites that mislead or pressure users into unintended decisions — will be prohibited. Examples include misleading prompts, hidden costs, confusing cancellation flows, and pre-ticked consent boxes. Banks will be required to conduct user testing and regular internal audits to ensure customer interfaces remain transparent and fair. 

In addition, the draft strictly forbids forced bundling of products, where customers are made to accept additional financial services as a condition for obtaining a particular product (e.g., bundling insurance with a loan). Customers must be given the option to choose whether or not to purchase such services independently. 

Explicit and Unambiguous Consent

One of the key principles in the RBI’s draft guidelines is the requirement for explicit customer consent for every product or service. Consent cannot be assumed or bundled across multiple offerings; it must be separate, informed, and clearly documented. This ensures that customers are fully aware of what they are agreeing to before any sale is completed. 

Regulation of Agents and Sales Practices

The RBI’s proposals also include norms to govern the conduct of Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs). Banks will now be required to maintain an updated list of such agents — who may appear to customers as bank representatives — and make this information publicly available. All agents operating on behalf of a bank must be clearly distinguishable from actual bank employees. 

Furthermore, telemarketing calls and in-person visits by agents will generally be allowed only between 9 am and 6 pm, unless customers have given explicit permission for different timings. 

Feedback and Accountability Mechanisms

The draft rules encourage lenders to actively seek customer feedback within 30 days of a sale to assess whether a product was understood and accepted appropriately. Banks will also be expected to analyze this feedback and report it regularly, helping to refine internal policies and ensure better compliance with the new standards. 

Public Consultation and Implementation Timeline

The RBI has opened the draft for public comments until March 4, 2026, inviting feedback from customers, stakeholders, and financial institutions. If finalized in its current form, these rules are expected to come into effect from July 1, 2026.