RBI's new misselling rules explained: What changes for bank customers
New Delhi, Jun 17, 2026
From influencers to bank agents, all sales channels come under regulator's new rules against financial product misselling
The Reserve Bank of India (RBI) has tightened rules for the sale of financial products, making banks and other regulated entities responsible for ensuring that customers are not pushed into unsuitable products through misleading sales practices. The new framework, which will come into effect from January 1, 2027, focuses on customer consent, transparency, digital marketing practices and accountability of banks for third-party agents.
For customers, the biggest change is that a simple signature or a click on a digital form will no longer automatically protect a lender if a product was sold inappropriately. The RBI has clarified that misselling can include selling products unsuitable for a customer’s profile, providing misleading information, selling without explicit consent, or forcing customers to buy bundled products.
What counts as misselling under the new RBI framework?
The regulator has widened the definition of misselling to cover several common practices that customers often face while dealing with financial institutions.
These include:
• Selling a product that does not match the customer’s financial needs, income level, risk appetite or profile.
• Giving incomplete, inaccurate or misleading information about a product.
• Selling a financial product without clear and recorded consent.
• Forcing customers to buy one product along with another service.
For example, if a customer takes a loan and is pressured to buy a specific insurance product from the same lender without being given a genuine choice, it could fall under the regulator’s scrutiny.
Banks will be responsible for agents and influencers
The new rules do not allow banks and non-banking financial companies (NBFCs) to avoid responsibility by blaming outsourced sales teams or marketing partners.
The RBI said the directions follow a “principle-based and channel-agnostic approach”, meaning regulated entities will remain responsible for advertising, marketing and selling financial products, whether done directly or through agents, outsourced arrangements or digital channels.
This means social media influencers, affiliates, digital marketing partners and other customer acquisition channels used by financial institutions will also come under monitoring. If such partners make misleading claims while promoting a product, the responsibility will ultimately remain with the regulated entity.
No forced bundling of financial products
A major relief for customers is the restriction on compulsory bundling.
Banks will not be allowed to make the purchase of an additional product a condition for providing another service unless specific regulatory conditions apply. For instance, customers cannot be forced to buy a particular third-party financial product just because they are availing a banking service.
The RBI has also asked lenders to ensure customers understand product features, charges, risks and exit conditions before purchase.
Incentives cannot encourage aggressive selling
Sales targets and incentives have often been linked to aggressive selling practices. Under the new rules, banks cannot design incentive structures that encourage employees or agents to push unsuitable products.
However, the RBI has clarified that banks can continue to provide incentives to their own employees. The restriction is aimed at preventing incentives from leading to misselling rather than stopping performance-based rewards completely.
What happens if a customer is sold a wrong product?
If misselling is established, the customer will be entitled to a refund of the entire amount paid for the product. The lender will also have to inform the customer about cancellation of the sale and compensate for losses arising from the transaction, according to the RBI framework.
This is significant because earlier, customers often struggled to prove that they were misled after agreeing to documents or terms and conditions.
What should customers do now?
While the RBI rules strengthen consumer protection, customers should continue to remain cautious before buying financial products.
Experts often advise customers to:
• Read product documents before signing or approving anything digitally.
• Check charges, lock-in periods, exit rules and risks.
• Avoid buying products only because they are offered along with loans, credit cards or banking services.
• Keep records of emails, messages and conversations related to sales promises.
The new framework shifts greater responsibility towards banks and financial institutions, but informed decision-making remains important for customers. With financial products becoming increasingly complex and sales moving to digital platforms, transparency will be a key factor in preventing misselling.
[The Business Standard]
