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RBI Acts: New Rules Block Bank Mis-Selling Tactics
16 Jun
Summary
- New RBI rules protect bank customers from unfair sales practices.
- Banks cannot link loans to mandatory insurance purchases.
- Effective January 1, 2027, with refunds for violations.
The Reserve Bank of India (RBI) has enacted significant new guidelines to safeguard bank customers against unfair sales practices and misleading offers. These regulations, introduced under the Commercial Bank- Responsible Business Conduct) Second Amendment Directions, 2026, will take effect from January 1, 2027. The rules apply to all commercial banks, with specific provisions for small finance banks, payments banks, regional rural banks, and local area banks.
Mis-selling is now clearly defined, encompassing situations where a bank sells a financial product unsuitable for a customer's needs, provides inaccurate or incomplete information, or obtains consent through misleading tactics. A key aspect of the new framework is the prohibition of linking essential banking services, such as home or personal loans, with the mandatory purchase of insurance policies.
Banks found guilty of mis-selling will be required to refund the entire amount paid by the customer and provide compensation for any incurred losses. Furthermore, customers have a window of 30 days from receiving a signed agreement copy to raise a complaint.
