RBI To Tighten Oversight On Advertising And Sale Of Financial Products; What It Means For Customers

The Reserve Bank of India (RBI) on February 11, 2026, issued draft amendment directions to strengthen the norms of advertising, marketing and sale of financial products and services by regulated entities (REs). This move follows the announcement released in the Statement on Developmental and Regulatory Policies that was released at the Monetary Policy Committee (MPC) meeting recently. The proposed changes aim to amend existing "Responsible Business Conduct" directions and make them more far-reaching for a broad range of financial institutions.

For customers, the changes are expected to mean better product disclosures, more checks on aggressive sales practices and more accountability for agents and digital platforms involved in selling financial products.

The draft amendments apply to commercial banks, small finance banks (SFBs), payments banks, local area banks, regional rural banks (RRBs), urban co-operative banks (UCBs), rural co-operative banks, All India Financial Institutions (AIFIs), non-banking financial companies (NBFCs), and housing finance companies (HFCs). Separate draft amendment directions have been issued under each category.

Standard Framework For Advertising And Sales

Currently, the instructions on the customer appropriateness and suitability in the context of insurance agency business are applicable to the scheduled commercial banks, excluding RRBs and HFCs. After taking a look at the framework, RBI has taken a decision to issue comprehensive instructions on advertising, marketing and sale of financial products and services, including third-party products and services for all banks and NBFCs.

The proposed framework aims at achieving uniformity in the promotion and distribution of financial products. It includes both in-house products and third-party products, which are often sold under agency or referral arrangements.

The draft amendment directions suggest a modification of existing responsible business conduct norms issued by the RBI's Department of Regulation. By broadening the scope to additional categories of REs, the regulator is trying to ensure that similar standards apply throughout the financial system.

Focus On Mis-Selling, Agents, And Digital Practices

A crucial feature of the draft is the focus on the prevention of mis-selling. Mis-selling is the practice of selling a financial product which is not appropriate for a customer's financial profile, needs or risk appetite. In many cases, customers may not get full and clear information regarding product features, charges or risks.

The draft also deals with the role of direct sales agents (DSA) and direct marketing agents (DMA), who are commonly hired by banks and NBFCs to source customers. They are expected to comply with the proposed norms in activities like marketing communication and customer interactions.

Another area highlighted in the draft is the use of dark patterns. These refer to the digital interface designs or communication strategies that may nudge, pressure or mislead customers into making certain choices. By explicitly including dark patterns in the ambit of the regulations, RBI has made it clear that the online and app-based sales channels will also be scrutinised.

Changes Made To The Agency And Referral Services Norms

Along with the changes in responsible business conduct directions, RBI has also taken a look at the regulatory framework governing "Agency business and referral services" provided by REs. These were earlier issued under Reserve Bank of India (Undertaking of Financial Services) Directions 2025.

Draft amendment directions under this framework have been proposed for commercial banks, SFBs, payments banks, RRBs, UCBs, rural co-operative banks and NBFCs. Agency business and referral services normally include the distribution of third-party financial products such as insurance or investment products.

What It Means For Customers

For customers, the proposed norms could mean better disclosures, fewer misleading pitches of products, and better safeguards against inappropriate sales.

Banks and NBFCs may face increased supervision of agents and digital platforms, which may reduce instances of high-pressure selling and enhance transparency in third-party distribution of products.

Public Comments Accepted Until March 4, 2026

RBI has invited comments and feedback from regulated entities, stakeholders and the public regarding the draft amendment directions. Comments can be submitted through or on March 4, 2026.

Stakeholders may provide their feedback via the 'Connect 2 Regulate' section on RBI's website by clicking on the respective draft document.

After going through the feedback, RBI will finalise the amended directions. Once finalised, the updated framework is expected to cover a wide range of financial institutions and will govern how financial products and services are advertised, marketed and sold to customers.