The Persistent Problem with Recovery
For years, borrowers have lodged complaints about the aggressive tactics used by some loan recovery agents. These grievances often detail harassment that extends beyond simple reminders to repay. Issues have included incessant phone calls at all hours,
abusive or threatening language, and even public humiliation through social media posts or by contacting a borrower's friends, family, or colleagues. These coercive methods, aimed at pressuring individuals into payment, have created a climate of fear and prompted the RBI to consolidate and strengthen its guidelines to protect consumers.
A New Code of Conduct for Agents
The upcoming framework, set to launch on January 1, 2027, establishes a clear and strict code of conduct for recovery agents. A cornerstone of this code is the restriction on contact hours: agents can only call or visit borrowers between 8 a.m. and 7 p.m., unless a different time has been explicitly requested by the borrower. Furthermore, the new rules mandate that all agents must be properly trained and receive certification from the Indian Institute of Banking and Finance (IIBF). This emphasis on professional training is designed to ensure agents handle their duties with care and sensitivity, shifting the focus from intimidation to professional communication.
More Transparency From Banks
Under the new regulations, the responsibility for fair practices falls squarely on the banks and lending institutions. Before initiating any recovery proceedings, banks will be required to inform the borrower about the specific recovery agency and the authorised agent assigned to their case. Perhaps one of the most significant changes is the mandate to record all telephone conversations between recovery agents and borrowers. These recordings must be preserved for at least six months, creating an official record that can be used to verify conduct and settle disputes. Banks must also establish a dedicated grievance redressal mechanism specifically for complaints related to recovery practices.
Your Rights During an In-Person Visit
The rules bring particular clarity to in-person interactions, a major point of concern for many. When a recovery agent visits you, they must now carry and present a valid identity card and an official authorisation letter from the bank. This letter must include the contact details for the recovery agency and the bank's grievance officer. This allows you to immediately verify the agent's credentials and legitimacy. The agent is expected to interact politely and can only discuss the loan details with the borrower or a designated guarantor, respecting their privacy. Any form of intimidation, physical or verbal, is strictly prohibited.
Rules for the Digital Age
Recognising that recovery now involves technology, the RBI has also introduced safeguards against the remote locking of financed devices like smartphones or tablets. Lenders cannot disable such a device until the loan is at least 30 days overdue, and a complete lock is only permitted after 60 days of non-payment. Crucially, even when a device is locked, essential functionalities like access to incoming calls, text messages, and emergency SOS services must remain active, ensuring the borrower is not completely cut off.
