The Reserve Bank of India (RBI) has proposed comprehensive guidelines to curb mis-selling of financial products and services by regulated entities, including co-operative banks. The proposal was announced as part of the Statement on Developmental and Regulatory Policies released on February 6, 2026.
RBI noted that mis-selling of third-party financial products such as insurance, mutual funds and pension schemes at bank counters has serious implications for both customers and banks. Emphasising customer protection, the central bank said there is a need to ensure that products sold by banks are suitable to the financial needs of customers and aligned with their individual risk appetite.
The proposed instructions will cover advertising, marketing and sales practices of financial products by regulated entities. Co-operative banks, which cater largely to retail, rural and small depositors, will be required to strengthen internal controls, disclosures and staff accountability while offering third-party products.
RBI clarified that draft guidelines will be issued shortly for public consultation before final norms are notified.
