From Financial Inclusion to Financial Exploitation: A Legal Appraisal of Predatory Mechanisms within India’s Banking and FinTech Framework.

Samridhya Roy

From Financial Inclusion to Financial Exploitation: A Legal Appraisal of Predatory Mechanisms within India’s Banking and FinTech Framework.

Author(s)	Mr. Samridhya Roy
Country	India
Abstract	A vibrant tapestry woven with the digital threads of inclusion and rapid innovation, the Indian financial landscape is often idealised as a strong engine of economic empowerment. Beneath this polished exterior, though, there is a discordant strain where the "noise" of systemic predation is gradually replacing the "symphony" of financial services. The shift from a supportive financial ecosystem to one marked by the "Anatomy of a Financial Trap" is the subject of this paper's critical, multi-sectoral analysis. We start by analysing the Banking Trap, in which dishonest practices have been institutionalised due to internal pressures from target-driven corporate cultures. The "mis-selling" of bundled goods and the strategic use of informational asymmetry by bank employees to meet aggressive sales targets are examined in this section. Moving on to the Insurance Trap, the study looks at how the fundamental principle of uberrimae fidei (utmost good faith) is being undermined. We contend that by strategically utilising "material non-disclosure" clauses, this principle, which was once a defence for the insured, has been turned into a tool for systemic claim repudiation, even in situations involving policy migration and porting . The paper also examines the Fintech industry's orchestration of the digital trap. We examine how "dark patterns" manipulative UI designs like "confirm shaming" and "forced action" are used to undermine consumer autonomy in order to support predatory payday lending and high-interest debt cycles . The historic RBI Responsible Business Conduct Amendment Directions (2026), which represent a clear jurisprudential shift from caveat emptor (buyer beware) to a strict regime of vender emptor (seller beware), are at the heart of our legal analysis . This research aims to provide a comprehensive defence framework for the "trapped" borrower by synthesising recent consumer commission precedents and the July 2026 mandates against digital coercion, advocating for the restoration of ethical equilibrium in the contemporary financial state.
Keywords	Financial Trap, Systemic Mis-selling, Predatory Lending, Dark Patterns, Digital Coercion, Uberrimae Fidei (Utmost Good Faith), Vender Emptor (Seller Beware), RBI Responsible Business Conduct (2026) , Insurance Repudiation, Consumer Autonomy, Debt Cycles, Contra Proferentem, Algorithmic Predation, Bancassurance, Informed Consent.
Published In	Volume 8, Issue 2, March-April 2026
Published On	2026-03-11

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From Financial Inclusion to Financial Exploitation: A Legal Appraisal of Predatory Mechanisms within India’s Banking and FinTech Framework.

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