The RBI observed rising complaints and incidents of unacceptable behaviour by Recovery Agents when reaching out to borrowers.
Taking cognisance of rising complaints and incidents of unacceptable behaviour of RAs (Recovery Agents), the apex bank issued fresh instructions to regulated entities including banks, NBFCs and ARCs.
The Reserve Bank of India (RBI) barred calling for loan recoveries between 7 pm and 8 am and directed recovery agents to refrain from intimidating people or indulging in similar unacceptable behaviour.
"It is advised that the REs (regulated entities) shall strictly ensure that they or their agents do not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts," said a newly issued RBI notification.
Restrictions on loan recovery methods
- RAs must not send inappropriate messages to people in any form
- They should not make threatening or anonymous calls
- Borrowers should not be called before 8 am and after 7 pm for recovery of loans that are overdue
- Recovery agents should not make false or misleading representations
RBI has already advised regulated entities to not resort to tactics like harassment or intimidation of borrowers, calling at odd hours etc. It issues guidelines in this regard from time to time. This is part of the Fair Practices Code (FPC).
RBI issued the additional guidelines to REs after taking into account growing incidences of RAs resorting to unacceptable practices. The new additions don’t just limit the hours for phonecalls tp borrowers for loan recovery but also extend the scope of guidelines.
The new instructions will apply to all commercial banks (including regional rural banks), Cooperative Banks, Non-Banking Financial Companies (NBFCs), Asset Reconstruction Companies (ARCs) and all India financial institutions, the RBI said.
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(With inputs from PTI)
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