New Delhi : If you have ever gone to your bank for a home loan and come back with an insurance policy you did not ask for, or downloaded a banking app only to find yourself trapped in a pop-up for a personal loan. The RBI on June 15, 2026, issued the Reserve Bank of India (Commercial Banks — Responsible Business Conduct) Second Amendment Directions, 2026. The directions apply to all commercial banks.
Mis-selling is when a bank sells you a financial product that is wrong for you, or sells it to you in a way that is unfair or deceptive. The RBI has now given this a formal legal definition for the first time under this framework. The consequence is significant. If mis-selling is established, the bank must refund the full amount paid by the customer and also compensate for any loss suffered. Customers can file a complaint within 30 days of receiving a signed copy of their agreement with the bank.
The notification defines compulsory bundling as making the purchase of one product conditional on buying another, whether it is the bank’s own product or a third-party product. This is now prohibited. There is a nuance here. If the bank genuinely requires insurance as a risk safeguard on a loan, say, a home loan protection plan — it can still ask for it. But the customer must be free to buy that insurance from any provider of their choice, not just the bank’s preferred partner.
Until now, “consent” in Indian banking was often a formality — a signature buried in fine print, a pre-ticked box on a form, or a catch-all clause that said something like “I agree to receive offers from the bank and its partners.” Under the new directions, a bank can only offer or sell a product — its own or a third party’s — if the customer has given explicit, recorded consent for that specific product. Consent for one product cannot be treated as consent for another.
When getting a customer’s consent, banks must prominently disclose key features of the product — fees, charges, interest rate, risks, lock-in period, and exit penalties — in a way that actually draws the customer’s attention to them. A large part of aggressive financial product selling in India happens not through bank employees but through Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs), commission-based agents who work on behalf of banks and often operate at the front lines of customer acquisition.
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