RBI Tightens Rules On Banks, NBFCs To Curb Mis-Selling And Protect Customers

The Reserve Bank of India (RBI) has introduced a comprehensive framework to curb mis-selling and strengthen customer protection across banks and NBFCs. Effective January 2027, lenders will be required to obtain explicit customer consent before selling financial products and maintain records of such approvals. The new norms prohibit compulsory bundling of third-party products, such as insurance policies, with loans and other banking services. Banks must clearly disclose whether they are acting as product manufacturers or distributors and ensure that marketing communications are sent only to customers who have opted in. The move comes amid growing concerns over aggressive sales practices and aims to enhance transparency, accountability, and trust in India's rapidly expanding financial services ecosystem while safeguarding consumer interests.