RBI Rules: Banks Can’t Offer Insurance or Credit Cards in One Click Anymore

RBI Rules: Big news for everyone. RBI issues new rule for banks. If you head over to any bank for a loan and they hand you a bunch of insurance policies and cards along with it, then this news is definitely for you. Starting July 1, 2026, banks won’t be able to sell insurance policies with just a click without your permission. The Reserve Bank of India has rolled out new regulations aimed at tackling misselling and dark patterns, which will completely transform how banks approach sales. Let’s break down what these rules entail and what you might encounter if you find yourself being missold.

Up until now, it’s been pretty common for customers to walk into a bank to get a loan or open an account, only to be offered insurance, mutual funds, or a credit card at the same time. Often, customers aren’t fully informed or don’t really grasp what they’re signing up for. Just hitting an “I Agree” button on a digital form can automatically mean you’re okay with multiple services. Later on, it turns out you’ve unintentionally agreed to extra products. The RBI thinks these practices aren’t in the best interest of customers. So, banks will now need to get clear, separate, and straightforward consent for each product they offer.

Sales tailored to each customer profile

With the new rules in place, banks will have to ensure that the products they sell actually fit the customer’s needs and profile. For instance, selling a complicated investment plan to someone with a limited income would be seen as fraudulent. If a product doesn’t suit the customer’s situation, that would be classified as mis-selling. Additionally, banks will need to specify whether the product they’re selling is from their own bank or from another company. This will help ensure that customers get accurate information.

The one-click approval process is coming to an end.

Digital platforms used to rely on pre-ticked boxes or a bunch of terms and conditions that you had to accept all at once. That’s changing now. You’ll need to give separate consent for each product. Customers will be clearly informed about what they’re agreeing to. Plus, banks will have to keep a secure record of this. This change aims to eliminate hidden agreements and complicated consent systems.

The RBI is also cracking down on digital practices known as dark patterns. These are sneaky tactics meant to mislead customers, like pre-ticked consent boxes or creating urgency with messages like “Today is your last chance.” Banks will now have to regularly check their apps and websites to get rid of these misleading features. This will help make digital banking more transparent and trustworthy.

The bank is also responsible for the agents

Sometimes, people in bank branches aren’t actually bank employees but third-party agents. Customers often confuse them for bank officials. With the new rules, banks will need to publicly list these agents. They’ll also be responsible for training them. Additionally, agents must clearly state that they’re not permanent employees. On top of that, both bank employees and agents can only call customers during set office hours. This should help cut down on unwanted calls and pressure sales.

What happens if mis-selling is found?

If an investigation shows that the bank sold a product incorrectly or didn’t provide all the necessary information, the bank has to refund the customer’s money. They’ll also need to compensate the customer for any financial losses. The bank must gather customer feedback within 30 days of each sale and create a detailed report every six months to ensure they’re held accountable.

When will the rules come into effect?

These are currently draft guidelines. Suggestions are available until March 4, 2026. The final rules are planned to be implemented from July 1, 2026. Banks will need to make necessary changes to their policies, digital systems, and agent arrangements before then.