Author: CS Sachin Kotian
Published in: Taxmann
NBFC marketing, distribution and cross-selling are subject to RBI conduct rules that prioritize transparent disclosures, genuine customer choice and institutional accountability.
NBFCs may market their own loans, use DSAs/DMAs to source customers, distribute mutual funds, act as insurance agents, and undertake certain other agency services. However, each activity has a distinct regulatory boundary. Advertising must align with the application form, Key Facts Statement, sanction letter and loan agreement, including the actual cost of credit and material charges. Communications must be understandable to borrowers and must not make misleading or unrealistic claims.
Cross-selling is permitted, but tying insurance or mutual funds to loan approval or pricing is prohibited. Insurance and mutual-fund purchases must be clearly voluntary; customers cannot be forced into a particular insurer, fund or scheme. NBFCs distributing third-party products act as agents, cannot guarantee investment returns, and must maintain suitability and grievance-redressal controls.
Outsourcing sales does not shift responsibility. NBFCs remain accountable for DSAs, DMAs, telemarketers and digital partners, including their scripts, training, privacy practices, representations and compliance with calling rules. Digital communications must clearly distinguish service notices from marketing, obtain appropriate consent, offer opt-outs and avoid dark patterns.
From January 1, 2027, RBI’s enhanced framework strengthens these expectations. Effective compliance therefore covers the full customer journey: product design, advertising, sales, distribution, data use, complaints and monitoring
