RBI Tightens Rules for Loan Recovery Agents: No Harassment, Banks Held Responsible

Mumbai, February 13:
The Reserve Bank of India (RBI) has proposed stricter guidelines for loan recovery agents to protect borrowers from harassment. Under the new draft rules, which apply to scheduled commercial banks (excluding regional rural banks) and housing finance companies, agents will no longer be allowed to intimidate or pressure customers during loan recovery.

Key Highlights of the RBI Draft Rules

• Call Recording: Every call made by a recovery agent must be recorded to serve as evidence in case of disputes.
• Civil Conduct: Agents are required to interact with customers in a polite and professional manner, with strict prohibitions on abusive language.
• Timing Restrictions: Agents cannot call customers after 7 PM. Recovery attempts are prohibited during sensitive occasions such as weddings, festivals, or bereavement.
• Mandatory Training: Recovery agents must undergo professional training through IIBF to handle collections appropriately.
• Background Checks: Banks must verify the past records of agents before hiring and periodically thereafter.
• Data Protection: Customer information must be safeguarded at all times and must not be misused or leaked.

Banks Will Be Directly Accountable

RBI has made it clear that banks will be directly responsible for the conduct of their recovery agents. If an agent violates these norms, the bank itself will face accountability. Banks must ensure all calls are recorded and that agents follow proper protocols, especially for customers whose loan matters are under litigation.

Special Considerations

The rules also emphasize sensitivity toward special occasions. Recovery efforts should not disturb customers during family tragedies, major personal crises, weddings, or festival times. This move comes in response to multiple complaints of agent misbehavior, including a highly publicized case in Bihar involving harassment after a family member’s death.

The new directives are set to be implemented from July 1, 2026, marking a significant step in protecting borrowers while maintaining accountability in the loan recovery process.