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The Reserve Bank of India (RBI) has introduced draft guidelines to curb the mis-selling of financial products by banks, aiming to protect customers from being forced or misled into buying unsuitable products like insurance or mutual funds. The new rules, expected to come into effect from July 2026, focus on transparency, suitability, and customer consent.
Mis-selling refers to the practice where banks push customers to buy financial products that may not suit their needs—often seen in cases where customers are encouraged to purchase insurance along with loans. The RBI’s move comes after increasing complaints and regulatory concerns around such practices. Even Finance Minister Nirmala Sitharaman has warned banks against mis-selling, calling it a serious issue and even an offence under law. To address this, the RBI issued draft directions on responsible business conduct in February 2026, marking a significant step toward improving trust and transparency in the banking system.
