No more harassment by recovery agents in the name of loan collection, RBI issues strict order
New Delhi (The Uttam Hindu): The Reserve Bank of India has taken a tough stand on loan recovery practices and issued strict new guidelines for all financial institutions. Under the revised rules, recovery agents will no longer be allowed to misbehave, harass, or intimidate borrowers who are unable to repay loans on time or are facing delays due to genuine difficulties. These directions apply equally to public and private banks, regional rural banks, NBFCs, housing finance companies, and cooperative banks. The RBI’s objective is to protect borrowers from mental harassment and undue pressure during the recovery process.
Police verification and training mandatory for recovery agents
The RBI has clearly stated that loan recovery must be legal as well as humane. Banks and financial institutions will now have to frame a clear policy governing the appointment, conduct, and monitoring of recovery agents. No person can be engaged as a recovery agent without proper police verification and background checks. In addition, agents must possess a valid recovery-related training certificate from the Indian Institute of Banking and Finance or an associated institution. If any agent violates the rules, the concerned bank will be held responsible and must take strict action, including removal of the agent.
Calls allowed only between 8 am and 7 pm
To provide relief to borrowers, the RBI has fixed specific time slots for recovery-related communication. Bank officials or recovery agents can contact customers only between 8 am and 7 pm. If a borrower requests not to be contacted at a particular time, that request must be respected. On humanitarian grounds, recovery calls or visits must be avoided during events such as death in the family, marriages, or festivals. The guidelines also prohibit harassing borrowers through social media, messages, or by contacting friends and relatives.
Call recording mandatory, agent details to be published
To ensure transparency, banks will now be required to display an updated list of authorised recovery agents, along with their names and contact numbers, on their websites and mobile apps. Before assigning a case to a recovery agent, the borrower must be informed through SMS or email. All recovery calls must be recorded, and customers must be clearly told that the call is being recorded. Agents are strictly barred from using abusive language, threats, or any form of physical intimidation. If a borrower files a complaint, the recovery process must be paused until the grievance is resolved.
Decision taken after rise in complaints and suicides
The RBI introduced these stringent measures after a sharp rise in complaints against recovery agents over the past few years. In several cases, borrowers were allegedly abused, threatened, and mentally harassed to such an extent that some were driven to suicide. Such incidents were reported particularly in microfinance and small-loan segments during 2023–24. Taking serious note of these developments, the central bank has now tightened the rules to prevent misuse and ensure borrower dignity.