- The RBI has tightened norms on advertising and selling financial products starting Jan 1, 2027
- New rules ban third-party incentives to regulated entities' employees but allow internal incentives
- Regulated entities are responsible for all marketing, including via agents and digital intermediaries
The Reserve Bank of India (RBI) on Monday tightened norms governing the advertising, marketing and sale of financial products and services, seeking to curb mis-selling and strengthen accountability across all distribution channels, including social media influencers and digital marketing intermediaries.
The revised directions, which will come into force on Jan. 1, 2027, adopt a principle-based and channel-agnostic approach amid growing concerns over the mis-selling of financial products and services to retail customers, PTI reported.
"While payment of incentives to REs' (regulated entities) employees by third parties has been prohibited, the directions do not prohibit payment of incentives by REs to their employees," the RBI said.
The central bank clarified that the objective is to ensure incentive structures do not encourage aggressive sales practices or result in the mis-selling of products and services.
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The final guidelines follow draft directions issued in February that proposed a comprehensive framework for the advertising, marketing and sale of financial products and services, including third-party offerings, by banks and non-banking financial companies (NBFCs). The RBI said stakeholder feedback was reviewed before the revised norms were issued.
"The directions adopt a principle-based and channel-agnostic approach, placing overall responsibility on the RE for all advertising, marketing and sale of financial products undertaken directly or through agents or outsourced arrangements," the central bank said.
The RBI also clarified that influencers, affiliates, Loan Service Providers (LSPs) and other digital marketing intermediaries engaged for product promotion or customer acquisition would be covered under the broader category of Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs).
Some stakeholders had sought clarity on whether the directions would apply to social media influencers engaged by regulated entities and LSPs involved in customer acquisition activities.
"The definition has been suitably modified to provide clarity in this regard," the RBI said.
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