The Reserve Bank of India (RBI) has proposed a ban on incentives paid by third parties to bank staff for selling insurance, mutual funds and other products to curb the mis‑selling of financial products.

Further, the central bank prohibited “dark patterns” on commercial banks' user interfaces to lure customers into purchases.

Dark pattern means "any practice or deceptive design pattern that is designed to trick users to do something they originally did not intend, by subverting or impairing the consumer autonomy, decision making or choice, amounting to misleading advertisement or unfair trade practice or violation of consumer rights," the directions read.

“It shall be ensured specifically that no incentive is directly or indirectly received by the employees engaged in marketing or sales of third-party products or services from the third party,” the draft read.

Under the Draft Amendment Directions on Advertising, Marketing and Sales of Financial Products and Services by Regulated Entities, the Central Bank said a bank must not bundle the sale of any third‑party product with its own offerings and must allow customers to buy it from any other provider if a bank product’s sale is made contingent on a third-party product.

The RBI mandated banks to refund the entire sum where mis‑selling has been established and to compensate customers for any losses in line with approved policies.

"Customers can lodge complaints regarding mis-selling of a product or service with the bank within the timeline specified by the respective financial sector regulators. In cases where no such timeline has been specified, customers can lodge complaints within 30 days of receiving the signed copy of the terms and conditions or agreement," the draft said.

Banks should establish a mechanism to seek customer feedback within 30 days of any sale to confirm understanding of product features and risks, and to prepare half‑yearly reports on feedback for policy review.

They must also ensure that practices, such as organising competitions among business units for the sale of products and services, neither create incentives for mis-selling nor encourage employees or direct sales agents to “push” products or services.

The RBI has also set out conduct norms for direct selling agents (DSAs), where telephonic contact and visits to customers should normally take place between 9 am and 6 pm, with any contact beyond those hours requiring customer consent.