The Reserve Bank of India (RBI) has issued fresh guidelines on how banks and lending institutions must conduct loan recovery, stressing that borrowers should not be harassed or threatened. The norms will apply to banks as well as other loan-providing entities and their recovery agents, and will come into force from January 1.
Under the new framework, lenders and recovery agents may contact borrowers only between 8 am and 7 pm. Contact outside these hours is permitted only with prior consent or if the borrower has specifically requested it. The RBI has also asked lenders to avoid contacting borrowers during sensitive situations such as medical emergencies, weddings and bereavements.
The guidelines prohibit abusive language, intimidation and repeated calls. Recovery staff are not allowed to shame borrowers in public or in front of family members, or threaten their property or reputation. The RBI has also barred lenders and agents from sharing borrowers’ personal details, photos or videos on social media with the intent to humiliate.
For in-person visits, lenders must inform borrowers a day in advance and disclose details of the recovery agency handling the case. Agents must meet borrowers at a location specified by the borrower; visits to a borrower’s home or workplace are allowed only if no location is provided or if the borrower repeatedly avoids the agreed meeting place. Agents must carry valid ID, an authorisation letter and notices, including details of the bank’s grievance officer.
The RBI has also laid down rules for technology-based recovery measures, including device lockouts. Lenders may disable laptops, computers or mobile phones only in cases where the loan was taken specifically to purchase those devices and repayments are overdue; such action is not permitted for personal loan borrowers. Remote restrictions cannot be imposed immediately after an EMI is missed: the process can begin only after 30 days, and devices may be disabled only if dues remain unpaid for 60 days. Even then, essential services such as calls, SMS, emergency contacts and work-related features must continue. Access to photos, videos, phone numbers, SMS, call logs and location data is prohibited, and the lock must be removed within one hour of repayment; delays can attract compensation of Rs 250 per hour. Banks must retain call records for at least six months and remain responsible for the conduct of outsourced recovery agencies.
