RBI To Issue Norms To Curb Mis-selling of Financial Products

Mumbai: The Reserve Bank of India (RBI) will issue comprehensive norms for regulated entities on advertising, marketing and sales practices to prevent mis-selling of financial products and services, the central bank said in its report on Trend and Progress of Banking in India 2024-25, released on Monday.

The RBI said mis-selling of financial products and services by regulated entities has significant consequences for both customers and the financial sector.

To address conduct-related concerns, it proposed to review the existing instructions associated with the engagement of recovery agents and recovery of loans, and issue harmonised instructions in this regard.

Meanwhile, complaints received by the RBI’s Ombudsman offices rose marginally in 2024-25, with issues related to loans and advances, credit cards and digital banking accounting for the bulk of grievances, according to the report. The offices of the RBI Ombudsman (ORBIOs) received about 2.96 lakh complaints during 2024-25, marking an increase of 0.8 percent over the previous year. A majority of these complaints originated from metropolitan and urban centres.

Complaints against public sector banks (PSBs) and private sector banks together accounted for over 72 percent of the total complaints. Complaints relating to loans and advances, credit cards, mobile/ internet banking, and deposit accounts contributed to around four-fifths of the total complaints received by ORBIOs during 2024-25. The credit cards category witnessed the highest increase in the number of complaints during 2024-25.

Among banks, private banks accounted for the highest share in complaints related to loans and advances and credit cards, while a majority of complaints relating to mobile/electronic banking, deposit accounts, and ATM/debit cards were against nationalized banks, the report said.