RBI’s 2026 Draft Directions on Responsible Business Conduct for Commercial Banks – A Detailed Analysis

The Reserve Bank of India has released the Draft Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Amendment Directions, 2026 to significantly tighten regulatory standards for how commercial banks advertise, market, and sell financial products and services. These draft Directions, issued under Section 35A of the Banking Regulation Act, 1949, are proposed to come into force from July 1, 2026 and are applicable to Commercial Banks (excluding Small Finance Banks, Payments Banks, Regional Rural Banks and Local Area Banks).

These amendments build on, and modify, the existing Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Directions, 2025, and are aimed squarely at tackling issues such as mis-selling, compulsory bundling, dark patterns in digital interfaces, inadequate disclosures, and misuse of consent. They also dovetail with broader consumer protection initiatives and guidelines issued by other sectoral and statutory regulators.

1. Statutory Basis and Effective Date

The draft Directions are framed by the Reserve Bank in exercise of its powers under Section 35A of the Banking Regulation Act, 1949. The RBI has recorded its satisfaction that issuance of these Directions is necessary and expedient in public interest.

  • Short title: These are titled as the Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Amendment Directions, 2026.
  • Commencement: They are proposed to be effective from July 1, 2026.
  • Scope: They modify the Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Directions, 2025 and also sit alongside the Reserve Bank of India (Commercial Banks – Undertaking of Financial Services) Directions, 2025, particularly in relation to insurance agency and other financial services undertaken by banks.

2. New and Expanded Definitions

The amendments insert several important definitions into paragraph 4 of the 2025 Directions. These definitions are central to the compliance framework and are critical for banks, compliance teams, and legal professionals to understand.

2.1 Compulsory bundling – 4(6A)

“Compulsory bundling” refers to a situation where a bank makes access to one product or service conditional on the customer availing another product or service—whether the latter is the bank’s own offering or that of a third party.

Voluntary packages or complimentary add-ons, where the customer’s consent is freely given and there is no additional direct or indirect cost, are explicitly carved out and do not qualify as compulsory bundling.

2.2 Dark pattern – 4(10B)

A “dark pattern” is defined as any deceptive user interface or user experience design used on any platform, which is configured to mislead or trick users into actions they did not intend, thereby undermining consumer autonomy, decision-making or choice. Such patterns may:

  • Amount to misleading advertisement,
  • Constitute unfair trade practice, or
  • Result in violation of consumer rights.

This definition is aligned with the wider regulatory attention on manipulative digital practices and is later linked specifically to the ‘Guidelines for Prevention and Regulation of Dark Patterns, 2023’ issued by the Central Consumer Protection Authority (CCPA).

2.3 Direct Selling Agent / Direct Marketing Agent – 4(10C)

A “Direct Selling Agent (DSA) / Direct Marketing Agent (DMA)” is described as an agent or agency engaged by a bank to market or sell the bank’s own or third-party financial products or services. This definition is foundational to the detailed regulatory regime for DSAs/DMAs introduced under Chapter IV.

“Explicit consent” is defined as:

  • A specific, informed and unambiguous indication of an individual’s choice,
  • Given through a statement or clear affirmative action,
  • Signifying agreement to a specified action or arrangement with a bank,
  • Which must be recorded or documented by the bank.

2.5 Mis-selling – 4(20A)

“Mis-selling” covers the sale of any financial product or service—bank’s own or third-party—falling under scenarios that illustratively include:

  1. Sale of a product/service which is neither suitable nor appropriate to the customer’s profile, even where explicit consent exists.
  2. Sale without providing correct or complete information, or on the basis of misleading information.
  3. Sale without obtaining explicit consent of the customer.
  4. Sale involving compulsory bundling of another product or service with a requested product or service.
  5. Any sale arrangement which is classified as mis-selling by the concerned financial sector regulator.

2.6 Third-party Financial Product or Service – 4(26A)

A “Third-party Financial Product or Service” is any product/service offered by a bank to its customers on behalf of another entity, under arrangements such as agency business, referral services, or any other similar arrangement.

3. New Framework in Chapter IV – Customer Guidance and Protection

The core operational changes are introduced through a new Section F in Chapter IV titled “Advertising, Marketing and Sales of Financial Products / Services by Banks”, spanning paragraphs 85A to 85ZB. This section sets out a robust compliance, conduct, and governance architecture.

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