The Reserve Bank of India directed banks and non-bank finance companies to ensure their internal policies and practices did not create incentives for mis-selling, and required suitability assessments and explicit customer consent to be in place from January 2027.
WHAT THE RBI REQUIRED
The central bank instructed banks and NBFCs to ensure their policies and practices did not create incentives for mis-selling, and barred bank employees from receiving direct or indirect incentives from third-party product providers. The rules take effect on 1 January 2027 and require lenders to assess a product's suitability for the customer and to obtain the customer's explicit consent before selling it.
The guidance covered both banks and non-bank finance companies. The rules also ban compulsory bundling of third-party products with a lender's own products and the use of 'dark patterns' on digital platforms.
CONSENT, AGENTS AND REDRESS
Consent can be recorded through signed declarations, OTP approvals or digitally recorded confirmations, and lenders must seek feedback from customers within 30 days of a sale. Direct selling and direct marketing agents must be publicly disclosed, clearly identifiable as agents and bound by the lender's code of conduct.
Where mis-selling is established, lenders must refund the full amount paid by the customer and compensate the customer for any loss under a board-approved policy.
Sources: The Hindu Business Line Banking