RBI Issues Guidelines for Sale of Financial Products

• 16 Jun 2026
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On 15 June 2026, the Reserve Bank of India (RBI) released the final guidelines for the sale of financial products by banks and non-bank lenders. The guidelines will come into force on 1 January 2027. In its draft guidelines released this year in February, the central bank formally defined 'mis-selling' as the sale of products that are unsuitable for a customer’s profile. 

The definition includes providing misleading or incomplete information, selling without receiving explicit consent and compulsory bundling of products. The guidelines required explicit, recorded consent for every product sold, prohibit coercive cross-selling and mandate full refunds and compensation when mis-selling is proven. On 15 June, the central bank stated that the new directives adopt a principle-based and channel-agnostic approach. 

They place the overall responsibility on the regulated entity for all advertising, marketing and sales of financial products whether conducted directly or via agents or outsourced arrangements. The guidelines specify that influencers, affiliates, lending service providers and other similar digital marketing intermediaries used for promotion or customer acquisition will be classified as direct selling agents. 

On 6 February, when announcing its intentions, the banking regulator emphasized that mis-selling financial products and services by any regulated entity has significant consequences for customers and lenders. It said that there is a clear need to ensure that third-party products as well as services sold at bank counters meet customer needs and align with the risk appetite of individual clients.

Consent Remains a Key Focus for RBI

The Reserve Bank of India (RBI) has defined explicit consent as a specific, informed and unambiguous indication of agreement that banks must record. Consent for multiple products cannot be combined and therefore, they need to be obtained separately. The central bank provided examples of how to obtain consent, which include a signed declaration (either physically or electronically), approval through a one-time password, digitally recorded confirmation and consent included in a clearly defined section of the product and service agreement.

However, regardless of the method used for getting the required consent, regulated entities must ensure that the records related to consent are securely stored and can be relied upon to demonstrate that consent was properly obtained by them. For example, if consent is obtained during a telephone call (through digitally recorded confirmation), the conversation may be transcribed and a transcript of the same can be shared with the customer.

Establishment of Comprehensive Policy

RBI's draft guidelines required banks to establish a comprehensive policy. This policy must be approved by the board. It should cover suitability assessments, customer feedback mechanisms and compensation strategies. Lenders must evaluate whether a product is appropriate for a customer or not on the basis of factors like customer age, their income, financial literacy and risk tolerance. 

However, RBI has chosen not to prescribe a specific format for these assessments. It stated that establishing detailed parameters, standardized formats, or operational frameworks for suitability assessments may not be feasible due to the diversity of products, distribution channels, customer segments and business models.

RBI suggested that self-regulatory organizations and industry associations in the financial sector work together with their members to design suitable assessment frameworks tailored to their products and customer segments, promoting uniformity within the sector. While RBI will not prescribe a format, compliance with the general principles is required. 

Source: Live Mint