A regulator tends to ban what has already become visible in practice. So when the Reserve Bank of India uses a term like “confirm shaming” in a formal directive, it is often a sign that the behaviour is no longer marginal

The RBI’s new directions on how banks must advertise, market and sell financial products, issued this week, identify 11 such tactics in an annexure: the countdown timer designed less to sell than to prevent comparison, the pre-ticked box you overlook until it is too late, the cancellation option buried so deep that opting out becomes harder than opting in.

The document groups all 11 under a single imported label—dark patterns—a term coined by web designers for interfaces engineered to steer users rather than serve them. What makes them “dark” is that the manipulation is embedded in the design itself, so the path of least resistance reliably favours the seller.

It works on the attentive and inattentive alike. These are not banking inventions. They are the familiar mechanics of modern e-commerce, now formally recognized in finance. In that sense, this catalogue may be the least consequential part of the document.

Every rule points to an existing abuse

The rulebook becomes more revealing on a second reading, where each prohibition can be read as a response to a known practice. Mis-selling is now defined in law: the sale of unsuitable products, or products offered without adequate disclosure or genuine consent. The definition is necessarily broad, but the specificity emerges in the rules that follow, each one seemingly written to match an abuse already under way.

Consider what the RBI has felt compelled to forbid. It bars bank staff from accepting incentives from third-party product providers whose offerings they sell—a rule that exists only because such incentives have clearly been in play. It bans mandatory bundling of one product with another, and it forbids linking a sanctioned loan to the purchase of a product without the customer’s consent

Each rule describes a particular manoeuvre: the insurance you could not decline, the policy folded quietly into the loan you actually came in for. It also requires, for the first time in explicit terms, that banks assess product suitability before selling—an acknowledgement that this was not consistently done.

And it establishes a standing mechanism for refunds and compensation in cases of mis-selling, the sort of permanent remedy usually reserved for a recurring condition.

Taken together, the direction of travel is difficult to miss. The institution you were taught to trust with your savings has been operating, in part, as a commission-driven sales shop, rewarded for steering you towards whatever pays it best rather than whatever serves you best.

This is precisely the pattern I have described for years in the insurance trade, where the endowment plan dressed as protection and the unit-linked policy sold to the unsuitable have enriched the seller at the buyer's expense. The new directions confirm, in RBI's own words, that banks are no different.

Vigilance matters

None of this should be mistaken for a cure. The system has been here before. The insurance regulator and the markets regulator have both issued stringent instructions against mis-selling, yet the practice has persisted largely unchanged. Rules evolve slowly; incentives do not. The commission remains the engine of the system, and it continues to run.

So read this document as a field guide. Treat each rule as a trace of the practice it seeks to curb, and you will know what to watch for the next time you sit across from a smiling relationship manager. The surest defence remains what it has always been: a reluctance to buy what is offered unasked, and a habit of treating unsolicited pitches with scepticism. The regulator has, in effect, handed you an authorized list of the tricks. Avoiding them is still your responsibility.

Dhirendra Kumar is founder and chief executive officer of Value Research, an independent investment advisory firm

A regulator tends to ban what has already become visible in practice. So when the Reserve Bank of India uses a term like “confirm shaming” in a formal directive, it is often a sign that the behaviour is no longer marginal

The RBI’s new directions on how banks must advertise, market and sell financial products, issued this week, identify 11 such tactics in an annexure: the countdown timer designed less to sell than to prevent comparison, the pre-ticked box you overlook until it is too late, the cancellation option buried so deep that opting out becomes harder than opting in.

The document groups all 11 under a single imported label—dark patterns—a term coined by web designers for interfaces engineered to steer users rather than serve them. What makes them “dark” is that the manipulation is embedded in the design itself, so the path of least resistance reliably favours the seller.

It works on the attentive and inattentive alike. These are not banking inventions. They are the familiar mechanics of modern e-commerce, now formally recognized in finance. In that sense, this catalogue may be the least consequential part of the document.

Every rule points to an existing abuse

The rulebook becomes more revealing on a second reading, where each prohibition can be read as a response to a known practice. Mis-selling is now defined in law: the sale of unsuitable products, or products offered without adequate disclosure or genuine consent. The definition is necessarily broad, but the specificity emerges in the rules that follow, each one seemingly written to match an abuse already under way.

Consider what the RBI has felt compelled to forbid. It bars bank staff from accepting incentives from third-party product providers whose offerings they sell—a rule that exists only because such incentives have clearly been in play. It bans mandatory bundling of one product with another, and it forbids linking a sanctioned loan to the purchase of a product without the customer’s consent

Each rule describes a particular manoeuvre: the insurance you could not decline, the policy folded quietly into the loan you actually came in for. It also requires, for the first time in explicit terms, that banks assess product suitability before selling—an acknowledgement that this was not consistently done.

And it establishes a standing mechanism for refunds and compensation in cases of mis-selling, the sort of permanent remedy usually reserved for a recurring condition.

Taken together, the direction of travel is difficult to miss. The institution you were taught to trust with your savings has been operating, in part, as a commission-driven sales shop, rewarded for steering you towards whatever pays it best rather than whatever serves you best.

This is precisely the pattern I have described for years in the insurance trade, where the endowment plan dressed as protection and the unit-linked policy sold to the unsuitable have enriched the seller at the buyer's expense. The new directions confirm, in RBI's own words, that banks are no different.

Vigilance matters

None of this should be mistaken for a cure. The system has been here before. The insurance regulator and the markets regulator have both issued stringent instructions against mis-selling, yet the practice has persisted largely unchanged. Rules evolve slowly; incentives do not. The commission remains the engine of the system, and it continues to run.

So read this document as a field guide. Treat each rule as a trace of the practice it seeks to curb, and you will know what to watch for the next time you sit across from a smiling relationship manager. The surest defence remains what it has always been: a reluctance to buy what is offered unasked, and a habit of treating unsolicited pitches with scepticism. The regulator has, in effect, handed you an authorized list of the tricks. Avoiding them is still your responsibility.

Dhirendra Kumar is founder and chief executive officer of Value Research, an independent investment advisory firm