RBI Responsible Business Conduct Second Amendment 2026
Why in the news
The central bank finalised stricter rules on how banks and other regulated entities sell financial products. The focus is customer protection, with prescriptive rules replacing softer expectations.
Key facts
- Issued: 15 June 2026; effective: 1 January 2027.
- Bundling: compulsory bundling of any third-party product or service (TPPS) is barred.
- Consent: explicit consent needed for every product or service.
- Mis-selling: full refund and loss compensation.
- Dark patterns: banned in digital interfaces.
- Agents: rules extended to DSAs, DMAs, sub-agents and TPPS representatives.
- NBFCs: may distribute insurance without prior RBI approval, subject to IRDAI nod.
Main provisions
| Area | Rule |
|---|---|
| Bundling | No forced tie-ups; if a third-party product is needed for risk cover, the customer may pick any provider. Banks cannot fund a purchase through a loan without explicit consent. |
| Consent modes | Signed declarations, OTP approvals, digitally recorded confirmations, clearly marked agreement clauses. Forms must default to ‘No’; records kept for 1 year after contract end. |
| Mis-selling | Sale without consent, without correct or complete facts, or with misleading facts. Bank refunds the full amount and compensates loss as per approved policy. |
| Complaints | Within RBI-set timelines or 30 days of getting signed agreements. |
| Incentives | Bank staff must not take incentives from third-party providers, directly or indirectly. |
| Feedback | Banks must seek feedback within 30 days of a sale to check understanding of features and risks. |
| Disclosures | Interest rates, fees, risks, lock-ins and exit penalties disclosed before consent. |
| Dark patterns | Banned for banks and direct selling agents; periodic audit of digital platforms. |
Background
- The framework sets ethical conduct norms for selling financial products and follows the G20/OECD High-Level Principles on Financial Consumer Protection (2011); earlier Master Directions came first.
- Bundled product: items sold as a package, for example home loan plus life insurance. TPPS: an offering from another company that the bank distributes, such as insurance or mutual funds.
- Dark patterns: manipulative designs that trick users; the CCPA banned 13 of them in November 2023 under the Consumer Protection Act, 2019.
Consumer protection architecture
- RBI Ombudsman Scheme for banking complaints; SEBI SCORES for capital markets; IRDAI grievance system for insurance.
- CCPA handles unfair trade practices; NCDRC handles consumer disputes; DICGC insures deposits up to Rs.5 lakh per depositor per bank.
Exam angle
- Effective date: 1 January 2027.
- Terms: TPPS, bundling, mis-selling, dark patterns, DSA, DMA.
- NBFC insurance distribution: no prior RBI approval but IRDAI approval needed.