RBI cracks down on mis-selling: Banks cannot sell financial products without customer consent from July 1, 2026

The RBI has issued fresh directions to stop banks from forcing add-on products on customers. From July 1, 2026, banks will not be allowed to push insurance, credit cards or investment schemes on customers unless they have clearly agreed to buy them. The new rules are aimed at stopping mis-selling and ensuring every product sale happens only with explicit customer consent. The regulator’s move comes after a surge in complaints from customers who say they were misled, pressured or signed up for add-on products without fully understanding the terms.

Why RBI felt the need to step in

Mis-selling has become one of the most common grievances in retail banking. Customers often report being told that insurance is “mandatory” with a loan, or that a credit card is automatically part of an account package.

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In many cases, people only realise later that money has been deducted, premiums are due, or they have been enrolled in products they never wanted.

The RBI has now made it clear: selling must be based on transparency and choice, not sales pressure or confusing fine print.

No product can be sold without ‘explicit consent’

At the heart of the new guidelines is a simple rule - banks must take clear and informed consent before selling anything beyond the customer’s original request.

Customers will no longer be signed up through sneaky checkboxes, pre-ticked options or unclear phone approvals. Banks will have to take clear, informed and properly recorded consent before selling anything. In short, if you did not clearly agree, the bank cannot sell it.

Forced bundling of products will stop

The RBI has also taken aim at a practice many borrowers are familiar with: compulsory bundling.

This is when banks attach an additional product such as insurance or a card - to another service like a home loan or car loan, often presenting it as unavoidable.

From July 2026, banks will have to offer customers real choice, along with clear pricing and product separation, instead of pushing bundled deals.

Mis-selling cases will mean full refund and compensation

Perhaps the strongest part of the RBI’s warning is the penalty.

If mis-selling is proved, the customer gets a full refund. The bank could also be asked to pay extra compensation for the inconvenience or loss. This is expected to make banks far more cautious about aggressive sales tactics.

RBI bans ‘dark patterns’ on apps and websites

The regulator has also flagged how digital banking platforms are increasingly being used to nudge customers into unwanted decisions.

So-called “dark patterns” - designs that make cancellation difficult, hide charges, or push customers towards clicking “yes” - will no longer be allowed.

Banks will have to ensure their apps and websites are clear, fair and not misleading.

Banks cannot disguise third-party products as their own

Another common issue has been banks marketing insurance or mutual fund products as if they are their own in-house offerings.

The RBI has now said banks must clearly disclose when a product is being offered by an outside partner, so customers know exactly what they are signing up for.

Banks must publish list of authorised agents

To prevent fraud and unauthorised selling, banks will now have to display the full list of their Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs) on their websites.

This will help customers verify whether a caller or salesperson is genuinely linked to the bank.

Sales calls restricted to daytime hours only

Unwanted calls from banking agents have become a daily irritation for many customers.

The RBI has restricted marketing calls to between 9 am and 6 pm. Customers registered under ‘Do Not Disturb’ cannot be contacted at all.

This is likely to reduce harassment and repeated pressure calls.

Banks must check with customers within 30 days

Under the new framework, banks will also have to follow up within 30 days of selling a product and ask customers for feedback.

This step is aimed at catching mis-selling early and giving customers a clear opportunity to report problems before it escalates.