Income from insurance products sold by 10 sample banks rose sharply to ₹16,747 crore in FY25 from ₹6,381 crore in FY19, an increase of two-and-a-half times. It grew 31% year-on-year from ₹12,783 crore in FY24. A retail banking head at a private bank told ET, "The RBI has proposed that obtaining customer consent is not enough, and that banks must additionally ensure the product is appropriate and suitable for the customer. This will make banks cautious in selling third party products like mutual funds and insurance policies." The Reserve Bank of India issued draft norms on February 11 aimed at curbing mis-selling of financial products. The proposed rules state that if mis-selling is proven, banks must refund customers fully and pay extra compensation for financial losses. Banks often link employee incentives and sales targets to selling third-party products such as insurance policies and mutual funds to boost fee income. Insurance and mutual fund companies also depend heavily on banks for distribution. This relationship can sometimes lead to sales of unsuitable or unwanted products. Bancassurance — a partnership between banks and insurance companies to sell insurance products — is a well-established model in India's financial sector. The new RBI draft guidelines seek to make these sales more customer-friendly and reduce unfair practices.