RBI Implements Stricter Regulations to Prevent Mis-Selling by Lenders
MUMBAI: The Reserve Bank of India (RBI) has finalized its consumer protection framework, introducing stringent guidelines aimed at curbing mis-selling, deceptive digital practices, and unauthorized bundling. The new rules shift to a prescriptive regime, requiring banks to adhere to strict consent-capture protocols and interface designs. This framework is set to take effect on January 1, 2027, following a six-month extension for system upgrades.
Consent and Interface Requirements
Under the new guidelines, banks must obtain explicit consent from consumers through verifiable methods, including signed physical or electronic declarations, OTP approvals, and recorded confirmations. The RBI mandates that interfaces default to ‘No’ or ‘I do not agree,’ ensuring that consumers consciously opt in to services. Additionally, banks are required to disclose key product terms upfront, including interest rates, fees, risks, lock-in periods, and exit penalties.
The framework prohibits bundled consent, requiring banks to present each product separately. This allows consumers to make selective choices without being pressured into accepting multiple products at once. Banks must also retain consent records for one year after the end of a contract to facilitate dispute audits.
Expanded Agent Scope and Data Access
The RBI’s new rules broaden the scope of direct selling and marketing agents, now encompassing all sourcing entities, including business correspondents and loan service providers, as well as sub-agents at the customer interface. Banks are required to publish and update directories of empanelled agents within seven days, detailing their identity, location, and permitted products.
The central bank has relaxed some rules regarding data access. Seeking device data, such as location and contacts, will not be considered a dark pattern if it is necessary for compliance and transparently disclosed. The guidelines also permit voluntary or zero-cost bundles, while reaffirming a ban on forced bundling and deceptive practices like subscription traps and confirm shaming.
Consumers can file complaints regarding mis-selling within the timelines set by the regulator or within 30 days of receiving signed agreements.
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