𝗥𝗕𝗜 𝗧𝗶𝗴𝗵𝘁𝗲𝗻𝘀 𝗠𝗶𝘀-𝗦𝗲𝗹𝗹𝗶𝗻𝗴 𝗡𝗼𝗿𝗺𝘀 𝗳𝗼𝗿 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗣𝗿𝗼𝗱𝘂𝗰𝘁𝘀
The Reserve Bank of India issued new rules to stop mis-selling of financial products. These rules apply to banks and non-banking financial companies. The new directions take effect on January 1, 2027.
Key facts from the announcement:
- The rules cover all marketing and sales channels.
- Social media influencers and digital marketing intermediaries fall under the rules.
- Regulated entities are responsible for all advertising and sales through agents.
- Third parties cannot pay incentives to employees of regulated entities.
- Regulated entities may still pay incentives to their own employees.
- Incentive structures must not lead to aggressive sales practices.
- Influencers and loan service providers are classified as direct selling or marketing agents.
The central bank aims to hold institutions accountable for how they sell products to retail customers. The new approach applies to direct sales and outsourced arrangements.