RBI Tightens Grip on Financial Product Advertising with New Draft Guidelines

In an assertive move to fortify consumer protection, the Reserve Bank of India (RBI) presented new draft amendment directions on Wednesday, targeting advertising, marketing, and sales practices in the financial sector. These guidelines pertain to all regulated entities, like banks and non-banking financial companies (NBFCs), introducing comprehensive standards to address various client concerns.

The draft changes, an outcome of deliberations at the Monetary Policy Committee (MPC) meeting, extend existing 'Responsible Business Conduct' regulations. They encompass a wide suite of entities, from commercial banks to housing finance companies, aiming to combat issues like mis-selling, compulsory bundling, and digital deception in the financial products domain.

Central to the draft guidelines is a ban on 'compulsory bundling,' ensuring that purchasing a financial product is never forced alongside another. Stringent definitions of 'mis-selling' are laid out, addressing inappropriate sales, incomplete information dissemination, and unauthorized bundling. Banks found guilty of mis-selling must reimburse customers and cover any resultant losses.

The draft stipulates explicit customer consent is mandatory before any sale, ensuring transparency and alignment with user preferences. Furthermore, all multiple consents must remain separate, with redesigned user interfaces directing attention to terms and conditions for informed agreement.

RBI's guidelines take a firm stance against 'dark patterns'—deceptive digital designs that may mislead users. Included are clear directives for Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs), alongside regulated telemarketing tactics, confined to specific hours unless otherwise approved by clients.

Stakeholders, including regulated entities and the public, are invited to submit feedback on these draft guidelines by March 4, 2026. The RBI's initiative underscores its commitment to safeguarding customers against any detrimental practices in the financial services industry. (ANI)