The Reserve Bank of India (RBI) has unveiled a comprehensive framework aimed at strengthening consumer protection in the banking sector by curbing mis-selling, deceptive marketing practices, and the use
of dark patterns. The new directions will come into effect from January 1, 2027.
Banks Must Follow ‘No’ Consent
Under the revised rules, banks will be prohibited from selling financial products without obtaining explicit customer consent. The RBI has also introduced a formal definition of “mis-selling,” covering situations where products are sold without proper disclosure, are unsuitable for customers, or are bundled with other products without voluntary consent.
One of the most significant changes is the restriction on compulsory bundling. Banks will no longer be allowed to force customers to purchase insurance, investment products, or other third-party services as a condition for availing a loan or any other banking product. Customers must be given the freedom to choose service providers where such products are required as risk mitigants.
Targeting Dark Patterns
The central bank has also targeted the growing use of “dark patterns” in digital banking channels. Practices such as pre-ticked consent boxes, misleading countdown timers, hidden charges, difficult cancellation processes, and confusing wording designed to influence customer decisions have been specifically prohibited.
To improve transparency, banks will be required to clearly disclose key product features, including interest rates, fees, risks, lock-in conditions, and exit charges before obtaining customer consent. Digital interfaces must ensure that consent is not pre-selected and that customers actively choose whether to opt in.
Tightening Rules On DSAs and DMAs
The RBI has further tightened rules governing Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs), making banks accountable for their conduct and ensuring stronger oversight of outsourced sales activities.
The new framework is expected to significantly improve customer protection, enhance transparency in financial product sales, and promote fair business practices across the banking industry.
