The Reserve Bank of India (RBI) has proposed banning incentives offered to bank staffers by third parties for selling their insurance and mutual fund products and services.

As part of a draft amendment to curb the mis-selling of financial products, the RBI has also proposed that banks must ensure that its user interfaces do not deploy “dark patterns” to entice customers. 

The central bank has listed out a set of nearly a dozen cases of such working which ought to be avoided.

In its draft amendment directions for advertising, marketing and sales of financial products and services by regulated entities, the RBI has proposed that banks should not be allowed to bundle the sale of any third-party product with any of its own products or services. A customer should be given the choice to choose between options from various companies.

As per the draft norms, banks will have to refund the entire amount paid by the customer for purchase of the product or service and also compensate the customer for any loss arising due to mis-selling as per an approved policy.

Banks should call customers only after getting their consent and restrict to doing so in office hours itself.

"A bank shall ensure that its policies and practices neither create incentives for mis-selling nor encourage employees/DSAs (direct sales agents) to 'push' the sale of products/services," the RBI said.

Examples of this would be organising competitions among business units for sale of products or services, earmarking specific days for targeted selling, it said.

"It shall be ensured specifically that no incentive is directly/indirectly received by the employees engaged in marketing/sales of third-party products/services from the third-party," it said.

The RBI has sought feedback on the draft circular before 4 March. After the guidelines are finalised, it will come into effect from July this year.