The Reserve Bank of India (RBI) has issued comprehensive Amendment Directions on the conduct of regulated entities in recovery of loans and engagement of recovery agents, bringing stricter safeguards for borrowers while strengthening accountability of lenders. The new norms, applicable to Urban Cooperative Banks (UCBs) and Rural Cooperative Banks (RCBs), will come into effect from January 1, 2027.
The directions require banks to adopt a Board-approved recovery policy, undertake due diligence before appointing recovery agencies, ensure IIBF-certified training for recovery agents, and enforce a code of conduct for both employees and recovery agents.
Banks must also disclose empanelled recovery agencies on their websites and inform borrowers before recovery visits.
RBI has prohibited abusive or intimidating recovery practices, restricting recovery calls and visits to 8 a.m. to 7 p.m., except where expressly permitted by the borrower.
The framework also mandates recording of recovery-related calls and preservation of such records.
For loans financing mobile devices, lenders may deploy technology-based device restrictions only under specified conditions, with gradual restrictions, protection of essential phone functions, and compensation of Rs 250 per hour for delays in restoring access after payment. Banks and service providers are also barred from accessing borrowers’ personal data for recovery purposes.
