Bought the wrong policy? RBI proposes 100% refund for mis-sold financial products
Zee News
In a major relief for customers, banks will now have to prove that a financial product actually suits you before selling it. For the first time, the RBI is making “suitability” a legal requirement. This means that before offering you insurance, mutual funds, or even credit cards, banks must assess factors like your income, age, financial understanding and risk appetite.
New Delhi: Ever walked out of a bank after a simple visit only to realise you’ve been signed up for an insurance policy you never really wanted? You’re not alone. In a big move aimed at protecting customers, the Reserve Bank of India (RBI) has introduced draft guidelines that could change the way banks sell financial products like insurance and investment schemes. Starting July 1, 2026, these new rules are expected to bring more transparency, clearer consent, and fewer surprise add-ons to your account. Here’s a simple breakdown of what’s set to change and how it could directly impact your money.
In a major relief for customers, banks will now have to prove that a financial product actually suits you before selling it. For the first time, the RBI is making “suitability” a legal requirement. This means that before offering you insurance, mutual funds, or even credit cards, banks must assess factors like your income, age, financial understanding and risk appetite.
If a product doesn’t match your profile and is still sold to you, it will officially count as mis-selling. That’s a big change. Until now, many banks and agents could aggressively push products with limited accountability. Under the new rules, that approach won’t be acceptable anymore.
The RBI’s draft guidelines make one thing very clear: mis-selling isn’t limited to cases where a product is sold without your permission. It goes much deeper than that.
If a bank sells you something that doesn’t match your financial profile, gives incomplete or misleading information, or pressures you into buying a product that isn’t right for you, it can still be treated as mis-selling even if you’ve signed the paperwork. In simple terms, just having your signature on a form will no longer be enough to justify a wrong or unsuitable sale.
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In a major relief for customers, banks will now have to prove that a financial product actually suits you before selling it. For the first time, the RBI is making “suitability” a legal requirement. This means that before offering you insurance, mutual funds, or even credit cards, banks must assess factors like your income, age, financial understanding and risk appetite.
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