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The Reserve Bank of India’s (RBI) proposed guidelines on the way banks should advertise, market or sell financial products may have a short-term impact on lenders, but will prove to be positive for the banking sector in the long run, IndusInd Bank CEO Rajiv Anand told businessline.
“I can fully understand where the RBI is coming from. Their focus over the last few years has been around customer protection. There have been various measures that they undertook over the past three years and this to that extent is a continuation of that process. I am sure they have seen some data which indicates that there has been some element of mis-selling by banks, both private and public sector ones,” Anand said.
“So, therefore, tightening these to my mind may hurt some banks in the short term, but will make banking system much stronger in future. It is too early to say if there will be material impact on other income, but the primary focus has to be in terms of adherence through the letter and spirit as far as guidelines are concerned,” he added.
According to draft norms, mis-selling will entail not just refunding amounts taken from the customer, but also shelling out compensation, which could keep the enthusiasm of banks to push third-party products such as insurance, mutual funds and pension under check. This could dent their other income, as businessline had reported earlier this month. A few private banks are likely to be more impacted due to the proposed norms, analysts say, as the gap between their core income and other income has shrunk sharply over the last years.
Acquisition finance
Anand said the RBI’s final guidelines on acquisition financing could provide IndusInd the opportunity to partner with some of the bigger banks for large transactions.
“This (acquisition finance) has been an ask from Indian banks for a long time. It gives us a fair crack at being able to participate in M&A financing. For banks like us, it gives us opportunity to partner with some of the larger banks to look at such transactions,” Anand said.
He added that not all transactions will move to Indian banks from foreign banks, but the approval provides a fair playing field to Indian lenders to participate in this space. He says Indian private sector banks and many State-owned banks have very strong underwriting capability and will be able to compete with foreign lenders in this space. The RBI’s final guidelines say banks can conduct acquisition financing of up to 20 per cent of their tier-1 capital, as against the proposed 10 per cent cap.
Published on February 22, 2026
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