RBI cracks down on banks’ practices, insurance and credit cards can no longer be bundled with loans
New Delhi (The Uttam Hindu): If bank officials force customers to buy insurance policies or credit cards along with a loan, relief is now on the way. The Reserve Bank of India (RBI) has decided to tighten rules against mis-selling and digital manipulation practices known as dark patterns. The central bank has issued new guidelines that will come into effect from 1 July 2026. Under these rules, banks will not be allowed to sell any additional product without the customer’s clear and separate consent.
Until now, digital loan applications often included pre-ticked boxes or a single “I agree” button. By clicking once, customers unknowingly approved insurance policies, credit cards, or other add-on services along with the loan. RBI has made it clear that this practice will no longer be allowed. As per the new rules, banks must obtain separate and explicit consent for each product. This means separate approval for the loan and separate permission for insurance or any other service.
The guidelines also make banks responsible for selling products strictly according to the customer’s financial profile and needs. If a bank sells a complex or high-risk product to a customer with limited income, it will now be treated as mis-selling. Banks must ensure that the product offered matches the customer’s financial capacity. They will also be required to clearly inform customers whether the product belongs to the bank itself or to a third-party company.
RBI has further banned the use of dark patterns on banking apps and websites. Practices such as showing fake urgency messages like “last chance today” or countdown timers to pressure customers into quick decisions will now be considered illegal. In addition, third-party agents operating in banks will not be allowed to misrepresent themselves as bank employees. They must clearly disclose their identity and are permitted to make sales calls only during official working hours.
The biggest relief for customers is that if an investigation proves that a bank sold a product using misleading information or incomplete disclosure, the bank will be required to refund the entire amount. If the customer suffered any financial loss due to such mis-selling, the bank will also have to compensate for that loss. RBI has released these guidelines in draft form and invited public feedback until 4 March 2026. The final rules will be implemented nationwide from 1 July 2026.