Clipped from: https://www.financialexpress.com/money/rbis-new-rules-to-stop-banks-from-mis-selling-full-amount-will-be-refunded-4139336/
RBI drafts strict rules to stop banks from mis-selling financial products; learn how these changes protect your money and what you should do next.
RBI cracks down on banks mis-selling
Bought an insurance policy you didn’t ask for? The Reserve Bank of India is finally stepping in with its new draft guidelines which could fundamentally change how banks are allowed to sell financial products to you.
Here’s everything you need to know about what’s changing from July 1, 2026, and what it means for your money.
Banks will have to prove a product suits you before selling it
For the first time, the RBI is making ‘suitability’ a legal requirement. Before selling you any financial product — insurance, mutual funds, credit cards — a bank must assess whether it actually matches your income, age, financial knowledge and risk appetite. If they sell you something that doesn’t fit your profile, that’s now officially mis-selling.
This is a significant shift. Until now, banks and their agents could push products aggressively with little formal accountability.
The end of the “I agree to everything” checkbox
One of the most consumer-friendly changes in the guidelines is around consent. Banks will no longer be allowed to bundle your agreement for multiple products into a single click. Every product requires separate, explicit consent — and that consent must be recorded by the bank.
This directly targets a common practice where customers end up with products they didn’t knowingly sign up for, buried inside a longer agreement.
RBI to shut down dark patterns to manipulate users
The RBI has explicitly called out “dark patterns” — digital design tricks used to manipulate user behaviour. If you’ve ever struggled to cancel a subscription, been rushed by a countdown timer, or found charges that weren’t mentioned upfront, you’ve encountered them.
Banks will now be required to audit their apps and websites periodically and remove any such tactics. The RBI’s list of banned practices includes pre-ticked consent boxes, fake urgency, hidden charges, and deliberately confusing cancellation flows.
Those agents at your bank branch? Banks are now responsible for them
Many financial products at bank branches are sold by third-party agents — Direct Selling Agents (DSAs) — who are not actually bank employees, even if it isn’t obvious. Under the new rules, banks must publish a full list of these agents, certify their training, and ensure they are clearly identifiable as external agents when working on bank premises.
This closes a loophole that has long caused confusion, with customers believing they were receiving advice from a bank representative when they weren’t.
Mis-sold a product? You’re entitled to a full refund
Perhaps the most powerful protection in the draft guidelines is the remedy for mis-selling. If a bank is found to have mis-sold you a product, it must refund the entire amount you paid — not just part of it — and compensate you for any financial loss you suffered as a result.
Banks will also be required to reach out to customers within 30 days of a sale for feedback, and file half-yearly reports on their findings. This creates a formal, ongoing accountability mechanism that didn’t exist before.
When do the rules kick in?
The draft guidelines are open for feedback until 4 March 2026. The final rules are scheduled to come into effect on 1 July 2026. Regulated entities are expected to update their board-approved policies, agent networks, digital interfaces, and sales practices ahead of that deadline.
For millions of bank customers across India, these rules represent one of the most significant shifts in consumer protection in recent memory. The question now is how rigorously they will be enforced.
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