Just a day after Minister of Finance Nirmala Sitharaman labelled mis-selling by banks an offence and urged lenders to return to their core business, new data reveals the staggering scale of deceptive practices in the country’s digital banking ecosystem.
A nationwide study released on Tuesday by LocalCircles, a community social media platform that consults with the Department of Consumer Affairs, shows that over one in two online banking users in India are being targeted by ‘dark patterns’, which are deceptive design interfaces intended to trick customers into making unintended financial decisions.
The survey, which analysed 1,61,000 responses across 388 districts, highlights a systemic issue that has moved to the forefront of regulatory agenda.
Praising the RBI’s move, Sitharaman at a press conference on Monday called mis-selling her biggest pet peeve. She criticised banks for spending more time selling insurance than focusing on their primary functions, a practice the LocalCircles report suggests is deeply embedded in the digital user experience.
“You [banks should] do your core banking business. You’re spending more time selling insurance where it’s perhaps not required. I’m glad that the RBI is coming up with guidance on why mis-selling is not going to be tolerated,” she said. “I think the message should go to the banks that you can’t afford to mis-sell. Mis-sell is an offence, if you ask me.”
LocalCircles identified between four and seven dark patterns on an average on the apps of 16 major lenders. Fifty-seven percent of those surveyed reported “basket sneaking”, where additional services or charges were added without clear disclosures. Nearly half said they had faced persistent “nagging” prompts to activate credit cards or insurance despite declining them.
Fifty-one percent described “forced action”, where they are required to sign up for unrelated services or share extra personal information to complete basic transactions. Forty-six percent reported “bait and switch” experiences, where the final product differed from what was originally advertised. Subscription traps—services that are easy to start but hard to cancel—were reported by 45 percent of those surveyed.
First Published: Feb 24, 2026, 19:31
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