RBI Tightens Mis-Selling Rules: Banks Must Refund Full Amount, Compensate Customers

• RBI proposes new rules for banks to refund full amount and compensate customers for mis-sold products/services.
• Draft directions on 'Responsible Business Conduct' expected to take effect from July 1, 2026.
• Mis-selling includes unsuitable products, misleading information, forced bundling, deceptive interfaces, and lack of explicit consent.
• Examples include insurance sold as 'safe investment' to elderly, aggressive mutual fund sales, and credit card misrepresentation.
• Banks must audit sales processes; consent alone won't protect them if products are unsuitable or misleading.