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RBI Issues Guidelines to Tackle ‘Brash, Deviant’ Loan Recovery Agents: Here's What It Means

News18 logo News18 16-08-2022 Ira Alok Puranik
RBI Issues Guidelines to Tackle ‘Brash, Deviant’ Loan Recovery Agents: Here's What It Means © Provided by News18 RBI Issues Guidelines to Tackle ‘Brash, Deviant’ Loan Recovery Agents: Here's What It Means

The Reserve Bank of India (RBI) has tightened its noose around the “brash and deviant” methods adopted by loan recovery agents.

Two months ago, RBI governor Shaktikanta Das had spoken about a “rise in complaints of customers being harassed by agents”. In this regard, he had also asked financial entities to take “special, prompt” action.

As per the RBI’s recent notification, the responsibility of managing loan recovery agents lies squarely with the financial entities, even if they have completely outsourced this work to a third party.

The entity, in concern, including commercial and co-operative banks, NBFCs, asset reconstruction companies, and All India Financial Institutions will be held responsible for any untoward action undertaken by the agent in the process of loan recovery.


Since 2021, as the economic effects of the pandemic started wearing off, major banks such as SBI, HDFC and Axis reported retail loan recovery rates as high as 95%. However, it brought along stories of harassment.

“It was a nightmare. During the pandemic, I was struggling financially and missed some repayment deadlines. I had every intention of repaying the loan, but did not have the resources. My family members and I received a barrage of calls and messages at odd hours. Even after I paid off my loan, the calls continued. It ticked me off,” said a Delhi-based IT professional.

The new guidelines dictate that agents should not intimidate or intrude on the privacy of borrower and their acquaintances for recovering loans. Persistent humiliation and threatening, both via public channels such as social media or privately, are completely ruled out.

Also, the agent should not call after 7 pm or before 8 am to talk about overdue loans.


However, SEBI resource person Anil Updhyaya feels this will do little as a standalone process. “In government-sponsored schemes, recoveries are assisted by Revenue officials (Tehsildar). But sometimes, the income of non-government-associated recovery agents is linked to incentives/commissions. Naturally, they do everything, even use muscle power to recover the (regulated entities) money and thus their own income. We need good credit analysis and securing of loan with the right assets so that recovery happens without any unnecessary reminders and force”.

The RBI’s recent recommendations on digital lending also proposed eliminating all third-party interactions between the borrower and regulated entity during the loan disbursal and repayment process. It also called for prohibiting an automatic increase in the borrower’s credit limit, without their clear consent.

Souparno Bagchi, COO, Balancehero India, applauded the RBI move. “This is a welcome step from the RBI. It reaffirms consumer centricity. It is also a win-win from lenders’ standpoint as responsible and regulated players will be able to further distinguish themselves in good light.”

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