The loan officer slides three forms across the desk. One is the home loan you actually came for. The other two are a life cover and a monthly investment plan, already filled in, already ticked, and he mentions that the file tends to move faster this way. You sign all three, because the sanction is two days out and arguing feels expensive. That exact scene, repeated a few million times a year across Indian branches, is what the Reserve Bank spent this February trying to make indefensible.
Why Your Signature Stopped Being the Bank's Defence
The interesting move here is not the list of bans. It is the definition. RBI's draft Amendment Directions, issued on 11 February 2026 after the policy statement of 6 February, define mis-selling to cover the "sale of a product / service, which is neither suitable nor appropriate in view of the customer's profile even if with his / her explicit consent." Read that last clause again. For years the branch's answer to any complaint was a signed form with your name on it. Under this draft, that form settles nothing.
Suitability is not left as a mood, either. A bank has to map what it sells against your age, income, employment profile, financial literacy, risk tolerance and investment horizon, classify its own products by complexity and risk, and write down the logic connecting the two. Most coverage treated this as compliance paperwork. That reading undersells it badly. Suitability is the load-bearing wall of the whole framework: bans on specific tricks age badly, because sales teams invent new ones, but a written suitability test follows the product wherever it goes. The forced-package problem is not unique to banking, and readers who followed our breakdown of the scam behind DTH combo channel packages will recognise the shape of it instantly.
Consent gets rebuilt from the ground up too. It has to be specific, informed, unambiguous and captured by a clear affirmative action, and it is required before the bank even approaches you, not merely before you sign. Having a loan with a bank no longer entitles that bank to pitch you insurance. Pre-ticked boxes and catch-all lines about receiving offers from partners are out. Anyone who has tried to trace who exactly sold their number to a call centre will find this familiar territory, much like the gaps we covered in TRAI's proposal for universal caller ID. There is a sharper provision buried in the staff rules: employees who market third-party products cannot accept any direct or indirect incentive from the company whose product they are pushing. That single line does more damage to aggressive branch selling than the entire consent chapter.
None of this arrives in a vacuum. Complaint volumes are what forced the regulator's hand, and they explain why the draft reaches for compensation rather than a warning letter. The figures below set the scale of the problem and the size of the remedy now attached to it.
The complaint window is the number to write on your fridge. It does not start when you notice the problem. It starts when the signed copy of your terms lands with you, which for most people is an email attachment they never open. Miss it and the refund route defined in the draft closes, leaving you back at the ordinary grievance queue, where the clock is longer and the outcome is thinner. Read the attachment the day it arrives.
Branch Practice Before, and What the Draft Demands
Most of these obligations only make sense when you set them beside what a branch actually does today. The left column is not a caricature. It is standard practice at a large number of Indian bank counters, and every line of it is now addressed by a specific clause.
| Practice Area | Common Branch Practice | What the Draft Requires |
|---|---|---|
| Consent | One blanket clause covering the bank and all its partners | A separate affirmative opt-in per product and per purpose |
| Bundling | Loan sanction quietly conditional on taking the cover | Compulsory bundling prohibited outright |
| Application forms | One combined form, add-ons pre-filled by staff | A distinct form per product, naming the product type up front |
| Who is selling | Agents at a desk inside the branch, indistinguishable from staff | Visible ID, badge or desk signage marking them as agents |
| Price via an agent | Never mentioned, often higher than going direct | Any rate or fee difference must be disclosed to you |
| App and web design | Decline buried, accept glowing, repeat pop-ups after refusal | Dark patterns banned, interfaces user-tested and audited |
| After you apply | Silence until the first premium debit shows up | An SMS or email asking you to confirm you applied at all |
| Best suited for | Branches chasing quarterly fee income targets | Customers who want a paper trail they can act on |
Look down the right column and a pattern shows up. Almost every clause creates a record: a timestamped consent, a separate form, a confirmation message, an audit of the app screen. That is deliberate. A rule you cannot prove was broken is a rule nobody enforces, and this draft is mostly an exercise in making the bank generate the evidence against itself. The dates below show how fast the regulator moved once it decided to act.
Five days from announcement to published draft, and roughly five months from there to the expected commencement date.
Where This Gets Messy
The agent rules are the most concrete thing in the package and the easiest to check. Direct selling agents may contact you only between 09:00 and 18:00 hours unless you have expressly authorised otherwise, they cannot turn up at your home or workplace without your explicit consent, and they must hand over their supervisor's details if you ask. That is a real, enforceable boundary. Whether anyone answers the phone when you report a breach is a separate question, and the honest answer is that we do not know yet. Our account of Airtel's automated support response is a fair map of how long that road can run once a large company decides your complaint is a ticket rather than a problem.
Then there is the grey area nobody has resolved. Compulsory bundling is defined as making one product conditional on another, but it carves out packages offered free of extra cost. So what about the savings account you are told to open before the personal loan can be processed? It costs you nothing directly. It also is not optional. The draft can be read both ways, and until the final text or a clarification lands, that ambiguity is worth exactly as much as the branch manager wants it to be worth. Paperwork ambiguity has a long history of landing on the customer's side of the counter in this country, as anyone who has fought through India's tax filing forms and process will tell you.
A few things to keep in view before you assume the problem is solved.
- This is still a draft. It went out for stakeholder comment, and the text that commences may differ from the version being analysed today.
- The refund route runs through the bank's own approved policy first, so the compensation you get for a proven bank mis-selling case depends on a document the bank wrote.
- Consent given in the past does not disappear. If you ticked a blanket box three years ago, expect to have to withdraw it actively rather than watch it lapse.
- Enforcement lives with branch-level supervision, which is precisely where every previous fair-practice code went to die.
Do one thing this week. Log into your bank's app, open the consents or communication preferences page, and look at what you have apparently agreed to. Most people find at least one blanket permission they do not remember granting, and the draft rules give you a reason to strip it out now rather than after the next call from a number you do not recognise. Then find the signed terms of anything a branch sold you in the last month and read them properly. The clock on bank mis-selling redress is short, and it is already running.
