The Reserve Bank of India has issued final guidelines prohibiting third-party incentives for employees of regulated entities selling financial products. Banks and NBFCs can still incentivize their own staff, with the rules effective January 1, 2027.
These regulations aim to protect consumers from aggressive sales tactics and mis-selling of financial products, ensuring greater transparency and choice in the market.
The Reserve Bank of India (RBI) has issued final guidelines aimed at curbing aggressive sales practices and mis-selling of financial products. Under the new rules, third-party incentives for employees of regulated entities (REs) involved in selling financial products are prohibited. However, banks and non-banking financial companies (NBFCs) are permitted to offer incentives to their own employees for such sales.
The RBI clarified that banks "shall not resort to compulsory bundling of any third-party product or service (TPPS) with any of their own products or services." Customers must be given the option to purchase third-party products from any provider of their choice. These regulations are intended to ensure that incentive structures do not lead to aggressive sales tactics or mis-selling.
Furthermore, the central bank stated that social media influencers or other digital marketing intermediaries engaged for promotion or customer acquisition will be classified under the definition of direct selling agents (DSAs) or direct marketing agents (DMAs) employed by REs. The final directions are set to take effect from January 1, 2027.
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