Mumbai, Dec 29 (PTI) The Reserve Bank will issue comprehensive norms to regulated entities on advertising, marketing and sales to prevent mis-selling of financial products and services to consumers.

Mis-selling of financial products and services by regulated entities (REs) has significant consequences for both customers and the financial sector, the central bank said in its Report on Trend and Progress of Banking in India 2024-25, released on Monday.

It is proposed to review the extant instructions on conduct-related matters associated with the engagement of recovery agents and recovery of loans, and issue harmonised instructions in this regard, it added.

About digital frauds, the report said the Reserve Bank of India (RBI) continues to work with stakeholders, including the Ministry of Home Affairs, to develop and operationalise measures to curb digital and cyber-enabled fraud and strengthen customer protection.

"REs need to put in place robust internal controls, ensure sufficient grievance redress officers at all levels, and enhance digital financial literacy to address digital frauds," the report said.

Recent initiatives by the Reserve Bank include the development of MuleHunter.ai to facilitate system-wide learning to identify and flag potential mule accounts implemented in 23 banks as of December 17, 2025, it added.

Another initiative of the RBI is a digital payments intelligence platform (DPIP) to leverage AI to flag risky transactions and share intelligence for fraud detection and prevention.

The RBI further said instructions related to limited liability of customers in unauthorised electronic banking transactions, issued in 2017, are being reviewed in view of major shifts in the banking landscape, including the emergence of new payment channels, higher volumes of digital transactions, and evolving fraud patterns.

"This is expected to improve customer safeguards," the report said.

The Reserve Bank further said its regulatory and supervisory policies remain focused on reinforcing cybersecurity, mitigating fraud, enhancing customer protection, integrating climate risk awareness, and preserving financial stability as an overarching goal.

Balancing financial innovations with stability, strengthening public trust, and supporting sustainable development will continue to guide the Reserve Bank’s policies going forward, it added.

It also highlighted that frauds present multiple challenges by exposing financial institutions to reputational, operational and business risks, while also weakening customer trust.

During 2024-25, based on the date of reporting by banks, the total number of frauds decreased. However, the amount involved in fraud increased.

"This was mainly due to re-examination and reporting afresh of 122 fraud cases, amounting to Rs 18,336 crore after ensuring compliance with the judgement of the Supreme Court of India dated March 27, 2023," the report said.

Based on the date of occurrence of frauds, during 2024-25, the share of card/internet frauds in the total stood at 66.8 per cent in terms of the number of cases. In terms of amount, the share of advances-related frauds was 33.1 per cent.

In 2024-25, private sector banks accounted for 59.3 per cent of the total number of frauds reported, while public sector banks accounted for 70.7 per cent of the amount involved.

Within private banks, card/internet-related frauds accounted for the largest share by number, and fraud related to advances constituted the largest share by value in 2024-25.

In contrast, state-owned banks reported the highest share of fraud related to advances, both in terms of the number of cases and the amount involved. PTI NKD NKD BAL BAL

RBI to issue norms to prevent mis selling and strengthen digital fraud detection using AI tools and revised liability rules. The Reserve Bank will issue comprehensive norms on advertising, marketing and sales to prevent mis selling, and will review and harmonise conduct-related instructions on recovery agents and loan recovery. It requires robust internal controls, adequate grievance redress officers and enhanced digital financial literacy. The Bank is deploying technology-MuleHunter.ai and a digital payments intelligence platform-to flag mule accounts and risky transactions, and is reviewing 2017 limited liability instructions for unauthorised electronic banking transactions to strengthen customer safeguards amid evolving digital payment risks.