The Reserve Bank of India has decided to defer the implementation of its new framework governing loan recovery and the engagement of recovery agents to January
2027, this move has given banks and other regulated lenders additional time to prepare for the tighter compliance requirements. This decision has been made after RBI reviewed feedback received from stakeholders on its proposed amendments. The revised framework aims to strengthen safeguards for borrowers while making lenders and recovery agents more accountable for their conduct. One of the key areas is the manner in which recovery calls and communication will be handled. The directions include stronger requirements around recording and maintaining recovery-related communications, creating a clearer trail that can help address disputes and complaints. The regulations also require banks to properly train recovery agents while ensuring they adhere to professional standards during the process. Borrowers will receive notifications regarding the recovery agents assigned to them, and all communication must be recorded. The RBI's framework also reinforces restrictions on harassment and inappropriate recovery practices. Borrowers should not be subjected to intimidation, threatening behaviour or other forms of coercive conduct during the recovery process. Lenders will remain responsible for ensuring that recovery agents engaged by them follow the prescribed code of conduct. With the implementation pushed to January 2027, lenders now have a longer transition window, while borrowers can expect stricter standards governing how recovery activities are conducted once the revised framework comes into force. The directions require banks to ensure that borrower information shared with recovery agencies is limited only to what is necessary for recovery-related work. Banks must also have safeguards, including penal provisions, to prevent the misuse of customer information. Experts believe the deferment gives lenders extra time to strengthen agent training, monitoring and recording systems, while ensuring recovery practices become more transparent going forward.
