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RBI Mis-Selling Rules: How to Get a Refund on a Bad Product
New RBI rules let customers demand a full refund if a bank mis-sold them a financial product. The rules take effect January 1, 2027, and cover insurance, mutual funds, and loans.
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The Reserve Bank of India last week published new rules aimed at curbing the mis-selling of financial products by banks and lenders. The rules take effect January 1, 2027.
Under the new framework, banks cannot design incentive structures that push employees or agents toward aggressive sales. The rules also apply to social media influencers and digital marketing partners hired by financial institutions.
The practical change for customers: a formal complaint process. If a customer believes a product or service was mis-sold, they can file a complaint with their bank. The RBI defined mis-selling to include offering unsuitable products, providing misleading or inaccurate information, selling without explicit consent, and mandatory product bundling.
If the bank finds mis-selling, the remedy is a full refund. The RBI stated: "In cases where mis-selling of a financial product/service is established, the bank shall refund the entire amount ... and also intimate the customer about cancellation of the sale."
The rules cover insurance, mutual funds, loans, and other products distributed through banks. The 2027 effective date gives institutions roughly 18 months to adjust compensation structures and compliance procedures.