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Informist, Monday, Jun. 15, 2026

--RBI: Norms on advertising, marketing, sale of fincl pdts effective Jan 1 
--RBI issues norms on advertising, marketing, sale of fincl products, svcs 
 

NEW DELHI – The Reserve Bank of India Monday tightened rules on advertising, marketing, and sale of financial products and services, including third-party products and services, by banks and non-banking financial companies. The RBI had released a draft of the proposed amended norms in February. The final amended directions will come into effect from Jan. 1.

The central bank has mandated banks and non-bank lenders to put in place a comprehensive policy for advertising, marketing, and sale of their own as well as third-party financial products and services, which should cover aspects relating to criteria to determine suitability and appropriateness of products and services offered to customers, feedback mechanisms, and customer compensation in case of mis-selling.

Moreover, banks and non-banking finance companies availing the services of direct selling agents and direct marketing agents are required to include in their policy aspects related to their eligibility criteria, due diligence at the pre- and post-engagement level, training of sub-agents, functions that may be assigned, inspection and audit, among other things, the RBI said.

The central bank called for transparency among banks and non-bank lenders on direct selling and marketing agents, asking them to put in place a code of conduct for the sale and marketing of financial products and services. Such code of conduct will apply to the institution's own employees, its direct selling and marketing agents and sub-agents, as well as representatives of any third-party product or service provider deployed for the purpose on its premises.

The regulator also doubled down on rules related to consent and transparency when regulated entities offer products and services to customers. Banks and non-banking finance companies should ensure that products and services, even through third parties, are offered or sold to a customer only with their explicit consent. Such consent may be obtained through a signed declaration, a one-time password-based approval, digitally recorded confirmation, or the like. "Further, while obtaining consent from a customer for more than one product/service on a single form, each product/service shall be clearly enumerated and the customer shall have the option to choose only the desired product(s)/service(s)," it said.

The regulated entity is required to preserve the consent and related records of a product or service sold by it till one year from the date of cessation of the contractual agreement with respect to the product or service, the RBI said.

The central bank directed banks and non-bank lenders not to advertise any third-party product or service as their own. It said that while giving details of any third-party financial product or service to a customer, the regulated entity should clarify its own role in providing the product or service.

Further, it directed banks and non-banking finance companies to send promotional communication about their own or third-party product offerings to a customer only if the customer has given explicit consent to receive such communication. It added that the process for unsubscribing from any kind of services or promotional communication should be simple.

The RBI also laid down guidelines for the conduct of bank and non-banking finance company employees, direct selling and marketing agents, and their sub-agents with customers. It directed upfront disclosures regarding the product, open communication of the terms and conditions, and timings mandated to contact customers, among others.

The central bank said that before a financial product or service, other than those determined as suitable for all customers as per the regulated entity's policy, is sold to an individual customer, its suitability and appropriateness for the customer should be determined by the entity itself based on an analysis of the features, risk-return attributes, time horizon, complexity, and fee structure, along with the customer's age, income, level of financial literacy, risk tolerance, and so on.

The RBI also mandated banks and non-bank lenders to ensure the use of a specific application form for the sale of a particular product or service and to prominently indicate the nature and features of the same in the respective application form. It also asked these entities to ensure that all documents related to the sale of their own products and services, including the terms and conditions, are available in the language of the region or in a language understood by the customer. Following receipt of an application for a specific product or service by a customer, regulated entitites are required, through a message, email, or any other secure medium, to send an acknowledgement to the customer regarding such receipt.

The RBI also issued guidelines to prevent mis-selling by banks and non-bank lenders, mandating that they should ensure that their policies and practices do not create incentives for mis-selling of products or services, whether their own or offered on behalf of a third party. A regulated entity shall not fund the purchase of a product or service by a customer, whether its own or of a third party, out of any loan facility sanctioned to the customer without her or his explicit consent, it said.

Further, the central bank mandated banks, non-bank lenders, and their direct selling and marketing agents to ensure that their user interfaces do not deploy any dark patterns. A dark pattern means any practice or deceptive pattern on any platform designed to mislead or trick users into doing something they did not originally intend or seek to do, by subverting or impairing their autonomy, decision making, or choice, amounting to misleading advertisement, unfair trade practice, or violation of consumer rights.

"A bank shall establish a mechanism to seek feedback from customers, within a period of 30 days from the sale of any financial product/service to ensure that customers have understood the features of the financial product/service and also the risks associated with such financial product/service," the RBI said. A half-yearly report on the findings of the feedback shall be prepared and used for review of existing policies and features of financial products or services, it added.

Further, the central bank mandated that a customer can lodge a complaint regarding mis-selling of a financial product or service with the bank or non-bank lender within the timeline specified by the respective financial sector regulators. "In cases where no such timeline has been specified, customers can lodge complaint within 30 days of receiving the signed copy of the terms and conditions/agreement," it said.

In cases where mis-selling of a financial product or service is established, the bank or non-banking finance company is required to refund the entire amount paid by the customer for purchase of the financial product or service and also intimate the customer about cancellation of the sale, wherever applicable. 

In the backdrop of rules on advertising, marketing, and sale of financial products and services, the RBI also amended the regulatory framework on agency business and referral services offered by regulated entities. Accordingly, it issued directions for undertaking of financial services by banks and non-banking finance companies, which will also come into effect from Jan. 1.  End

Reported by Pratiksha

Edited by Rajeev Pai

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