Module: General Practice
Q18: As per the RBI guidelines, what is a bank legally obligated to do immediately if the mis-selling of a financial product is formally established?
✅ Correct Answer: C
The correct answer is instantly refund the entire amount paid by the customer.
Along with giving back one hundred percent of the money and telling the customer that the sale is officially canceled, the bank has another rule to follow.
The bank must also pay the customer extra money for any real loss they suffered because of the bad sale.
This extra payment is figured out based on rules approved by the bank's board of directors.
Along with giving back one hundred percent of the money and telling the customer that the sale is officially canceled, the bank has another rule to follow.
The bank must also pay the customer extra money for any real loss they suffered because of the bad sale.
This extra payment is figured out based on rules approved by the bank's board of directors.
🧠 Real-World Scenario:
Imagine a retired teacher is tricked into putting their 5 Lakh life savings into a terrible bond that charges huge fees. Suddenly, the RBI Ombudsman reviews the case and declares it an official mis-selling incident.
According to the rules, they can force the bank to instantly refund the full 5 Lakhs, plus pay extra compensation for the interest the teacher lost while the money was trapped. This means the bank eats the entire loss, not the victim.