What changed
RBI issued the Second Amendment to the Responsible Business Conduct Directions for UCBs, effective January 1, 2027. It introduces formal definitions for compulsory bundling, dark patterns, mis-selling, explicit consent, and DSA/DMA sub-agents. These amendments expand the 2025 framework to curb deceptive sales practices.
What it means for you
UCBs must now explicitly ban tying one product to another without customer choice and avoid any user interface tricks that mislead customers. Mis-selling is clearly defined, covering unsuitable products, incomplete information, lack of consent, and bundling. Banks need to overhaul sales processes, train staff, and monitor DSAs to ensure compliance and avoid regulatory action.
What you must do
- Review and update all product bundling policies to eliminate compulsory bundling by Jan 1, 2027.
- Audit digital platforms and marketing materials to remove any dark patterns that could mislead customers.
- Train all staff and DSA/DMA agents on the new definitions of mis-selling, explicit consent, and prohibited practices.
- Implement systems to capture and document explicit customer consent for all product sales, including third-party products.
- Establish oversight mechanisms for DSA/DMA sub-agents to ensure they comply with the same standards as direct agents.
Who it affects
Urban Co-operative Banks (UCBs), Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs), DSA/DMA sub-agents, Customers of UCBs
What is 'compulsory bundling' under the new rules?
It means a UCB cannot make a customer take one product or service as a condition for getting another product or service, whether it's the bank's own or a third-party offering.
When do these amendments take effect?
The directions come into effect from January 1, 2027, giving UCBs time to align their practices.
What counts as 'mis-selling' now?
Mis-selling includes selling an unsuitable product despite explicit consent, providing incomplete or misleading information, selling without explicit consent, compulsory bundling, or any other element defined by the financial sector regulator.