Why is the RBI proposing a ban on incentives for bank staff?

The RBI is proposing to ban incentives paid to bank staff by third parties like insurance companies to address concerns about the mis-selling of financial products.

What are 'dark patterns' in banking, and how will they be addressed?

Dark patterns are deceptive user interface designs that lure customers. The RBI has proposed that banks must ensure their user interfaces do not employ these manipulative tactics.

What is the RBI's stance on bundling third-party products with bank offerings?

The RBI has proposed that banks must not bundle the sale of any third-party product with their own products, and customers should have the option to purchase from other providers.

Home / Business and Economy / RBI Eyes Ban on Bank Incentives for Product Sales

RBI Eyes Ban on Bank Incentives for Product Sales

20 Feb

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Summary

RBI proposes banning third-party incentives for bank staff.
Concerns raised over mis-selling of insurance and mutual funds.
Banks must avoid 'dark patterns' in user interfaces.

RBI Eyes Ban on Bank Incentives for Product Sales

The Reserve Bank of India (RBI) has initiated regulatory scrutiny over how financial products are distributed through banking channels. This action stems from the RBI's recent observations regarding the mis-selling of insurance and mutual fund products. To curb this practice, the central bank has proposed a significant change: banning incentives paid to bank staff by external entities like insurance companies and mutual fund houses for selling their offerings.

Additionally, the RBI is focusing on ensuring a transparent customer experience. Banks will be required to actively prevent the use of 'dark patterns'—deceptive design elements intended to manipulate users—within their digital interfaces. Another key proposal is to prohibit the bundling of third-party product sales with a bank's own offerings, thereby ensuring customers have the freedom to choose their product providers.

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