What changed
RBI observed recovery agents deviating from existing outsourcing guidelines. It now explicitly prohibits specific harassment tactics like persistent calls, social media abuse, and threatening anonymous calls. The circular supplements existing rules and applies to a wide range of regulated entities.
What it means for you
Banks and lenders must tighten oversight of recovery agents to ensure compliance with these explicit prohibitions. Non-compliance will invite serious regulatory action, increasing operational risk for institutions that fail to monitor outsourced recovery activities.
What you must do
- Review and update your recovery agent contracts to include these specific prohibitions on harassment.
- Implement monitoring mechanisms to detect and prevent agent calls before 8 AM or after 7 PM.
- Train recovery agents on the new rules and ensure they understand consequences of violations.
- Establish a grievance redressal system for borrowers to report agent misconduct.
- Conduct periodic audits of recovery agent practices to ensure compliance.
Who it affects
All Commercial Banks (including Local Area Banks, Regional Rural Banks, and Small Finance Banks) excluding Payments Banks, All-India Financial Institutions (Exim Bank, NABARD, NHB, SIDBI, NaBFID), All NBFCs including Housing Finance Companies, All Primary Urban Co-operative Banks, State Co-operative Banks, DCCBs, All Asset Reconstruction Companies
Does this circular apply to microfinance loans?
No, microfinance loans covered under the Master Direction on Microfinance Loans (March 14, 2022) are excluded from this circular.
What specific actions are prohibited for recovery agents?
Agents cannot intimidate, harass, humiliate publicly, intrude on privacy, send inappropriate messages, make threatening or anonymous calls, call persistently, or call before 8 AM and after 7 PM.
Who is ultimately responsible for recovery agent actions?
The regulated entity (bank or lender) that employs the recovery agent bears full responsibility for the agent's actions, as per RBI's outsourcing guidelines.