RBI amends NBFC – Responsible Business Conduct Directions as well as HFC Directions introducing requirements on advertising, marketing, sale of financial products

The Reserve Bank of India (“RBI”) has issued the Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Second Amendment Directions, 2026 (“Amendment Directions”). The Amendment Directions introduce a comprehensive regulatory framework governing the advertising, marketing and sale of financial products and services by Non-Banking Financial Companies (“NBFCs”), with the objective of strengthening customer protection, ensuring suitability and appropriateness of financial products, preventing mis-selling and regulating the conduct of intermediaries engaged by NBFCs.

Additionally, RBI has also issued Reserve Bank of India (Housing Finance Companies) Second Amendment Directions, 2026 to incorporate the following changes-

1. Existing provision regarding “Advertising, Marketing and Sales”, “Code of Conduct for DSAs/DMAs” have been deleted.
2. A new provision on “Advertising, Marketing and Sale of Financial Products / Services by HFCs” has been inserted mandating the HFCs to ensure compliance with the provisions of paragraphs 101A to 101ZA under Chapter IIIA of Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025.

These Amendment Directions will come into effect from 1^st January 2027.

Key Highlights:

1. The Amendment Directions introduce a new chapter on Advertising, Marketing and Sale of Financial Products / Services by NBFCs, which will apply to NBFCs and certain additional regulated entities, including NBFC-P2P platforms, Mortgage Guarantee Companies and Standalone Primary Dealers.
2. NBFCs are required to formulate and implement a comprehensive policy governing the advertising, marketing, and sale of their own as well as third-party financial products and services. Such policy must cover, among other things, suitability and appropriateness assessment, customer feedback mechanisms, customer compensation for mis-selling, and governance of Direct Selling Agents (“DSAs”) and Direct Marketing Agents (“DMAs”).
3. NBFCs engaging DSAs/DMAs must establish eligibility criteria, due diligence procedures, training requirements, monitoring mechanisms, inspection and audit processes, and penal measures for non-compliance. Further, NBFCs must maintain and publish an updated list of empanelled DSAs/DMAs on their website.
4. The Amendment Directions introduce definitions for key concepts including compulsory bundling, dark patterns, explicit consent, mis-selling, third-party products and services (TPPS) and DSA/DMA arrangements.
5. NBFCs are required to ensure that financial products and services are offered or sold only after obtaining the customer’s explicit consent through prescribed methods, including signed declarations, OTP-based approvals, digital confirmations, or other documented mechanisms.
6. While obtaining consent, NBFCs must prominently disclose key product features, including applicable fees, charges, interest rates, risks, financial commitments, lock-in conditions and exit terms. Consent mechanisms must be designed so that customers actively review the applicable terms and conditions before providing consent.
7. NBFCs are prohibited from marketing third-party products as their own products and are required to clearly disclose their role while offering third-party products and services.
8. NBFCs are prohibited from funding the purchase of their own or third-party products and services through customer loan facilities without obtaining the customer’s explicit consent.

Source: Reserve Bank of India