The Reserve Bank of India (RBI) on Monday tightened norms governing the advertising, marketing, and sale of financial products and services to curb mis-selling and hold regulated entities accountable across all distribution channels, including social media influencers and digital marketing intermediaries.
The revised directions, effective from January 1, 2027, adopt a 'principle-based and channel-agnostic approach,' according to a PTI report. The move comes amid growing concerns over the mis-selling of financial products and services to retail customers.
'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 central bank said. The RBI clarified that the objective is to ensure incentive structures do not encourage aggressive sales practices or lead to mis-selling.
The final norms follow draft directions issued in February that proposed comprehensive guidelines for advertising, marketing, and sale of financial products and services, including third-party offerings, by banks and non-banking financial companies (NBFCs). After reviewing stakeholder feedback, the central bank issued the amended directions on Monday.
'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,' it said.
The RBI said influencers, affiliates, Loan Service Providers (LSPs), and other similar digital marketing intermediaries engaged for product promotion or customer acquisition would fall within 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.
