TITLE: India's Reserve Bank Issues Second Amendment Directions on Responsible Business Conduct for All India Financial Institutions
BODY:
On June 15, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (All India Financial Institutions – Responsible Business Conduct) Second Amendment Directions, 2026, establishing comprehensive instructions on advertising, marketing, and sale of financial products and services to all All India Financial Institutions (AIFIs). The directions come into effect on January 1, 2027.
The amendment introduces new definitions and regulatory requirements covering advertising, marketing, and sales conduct. Key definitions include compulsory bundling, dark patterns, Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs), explicit consent, mis-selling, and third-party products or services. The RBI defines mis-selling as the sale of financial products or services that are unsuitable for customers, sold without proper disclosure or customer consent, or involving compulsory bundling. The amendment establishes that AIFIs must implement comprehensive policies covering suitability assessment, feedback mechanisms, and customer compensation for mis-selling cases.
AIFIs must maintain updated lists of engaged DSAs and DMAs on their websites, ensure proper identification of non-employee sales representatives, and establish codes of conduct applicable to employees, agents, and third-party representatives. The directions prohibit dark patterns in user interfaces and require adherence to the Central Consumer Protection Authority's Guidelines for Prevention and Regulation of Dark Patterns, 2023. The amendment specifies conduct standards for sales personnel, including upfront disclosure of fees and charges, restrictions on contact hours between 09:00 and 19:00 hours, and prohibitions on misleading or coercive practices. AIFIs must obtain explicit customer consent for each product or service, establish feedback mechanisms within 30 days of sale, and process mis-selling complaints within timelines specified by respective financial sector regulators or within 30 days of receiving signed agreements. The directions include an illustrative list of dark patterns relevant to AIFIs, encompassing false urgency, basket sneaking, confirm shaming, forced action, subscription traps, interface interference, bait and switch, drip pricing, disguised advertisements, nagging, and trick wording.
AIFIs must ensure compliance with these directions by January 1, 2027, and align their policies and practices accordingly.