RBI Final Rules On Selling Financial Products Kick In From January 2027; Influencers Brought Under DSA Norms

The Reserve Bank of India (RBI) has wrapped up its consultation process and put out final directions covering how banks and non-banking financial companies (NBFC) advertise, market and sell financial products.

These rules take effect from 1 January 2027 and apply regardless of whether the sale happens directly or through agents, outsourced partners or digital channels.

Where Incentives Stand

The RBI has also clarified the rules around incentive payments linked to the sale of financial products.

Under the framework, third-party product providers cannot directly pay incentives to employees of banks, NBFCs, or other regulated entities. However, these institutions can continue to reward their own employees through internal incentive programmes.

The idea is to reduce conflicts of interest and discourage aggressive sales practices that may lead to mis-selling, while still allowing lenders to design their own performance-based reward structures.

Influencers Now Fall Under DSA Rules

Social media influencers and other digital marketing intermediaries roped in for promotion or customer acquisition will now be treated the same way as direct selling agents (DSA) or direct marketing agents.

This effectively brings influencer marketing for financial products under the same regulatory umbrella that already governs traditional sales agents, lending service providers and similar intermediaries.

How Mis-Selling Will Be Judged

Whether a sale counts as mis-selling will be judged based on what the customer's profile looked like at the point of sale, not at the point when a complaint is later filed. The RBI has also said that suitability checks only need to be carried out for products that aren't appropriate for every type of customer, rather than applying blanket assessments across the board.

On how suitability should actually be measured, the central bank has chosen not to prescribe a fixed format. It acknowledged that with such a wide variety of products, distribution channels, customer segments and business models, a single standardised framework wouldn't work well in practice.

Instead, it has suggested that self-regulatory organisations and industry associations work together with their members to build suitability frameworks suited to their own products and customer bases, aiming for some consistency at the sector level even without a uniform RBI-mandated template.

Consent Rules Tightened, But Made Simpler Too

Consent for financial products must now be specific, informed and unambiguous, and recorded properly by the lender. Importantly, consent for different products cannot be bundled together; each one needs separate sign-off from the customer.

Acceptable ways of capturing this consent include a signed declaration, OTP-based approval, a digitally recorded confirmation, or consent built into a clearly marked section of the product agreement. Regardless of which method is used, regulated entities must keep secure records that can later prove consent was properly taken, including transcribing phone-based consent and sharing that transcript with the customer.

Also Read - RBI Lowers Capital Burden On Banks For ECLGS 5.0 Loans

At the same time, the RBI has dropped an earlier requirement that customers give an additional confirmation after applying for a product. Banks had flagged that this extra step was slowing down processing times, particularly for transactions where speed matters. In its place, regulated entities must now simply send an acknowledgement of the application, along with a contact number the customer can use for any follow-up queries.

Sources:

The Economic Times

Mint