The Reserve Bank of India i.e. RBI has issued new draft rules with the aim of making the loan recovery process of banks more transparent and safe for the customers. The purpose of these new proposed rules of the Central Bank is to stop the arbitrariness of recovery agents and to strengthen the rights of borrowers.
In such a situation, if these rules are implemented in the final form, then banks across the country may have to follow them from October 1, 2026. These rules will not be completely applicable to all banks. This new framework of RBI will be applicable to commercial banks, while small finance banks, payment banks and local area banks will remain out of it for now. RBI has clearly defined Recovery Agency and Recovery Agent for the first time
According to the new rules, any external organization appointed by the bank for loan recovery will no longer be considered a recovery agency. The persons who directly contact the customers will be called recovery agents. This will also include business correspondence if they do recovery work. Due to this, more agencies will now come under the purview of RBI.
This is also a guideline
Banks will have to compensate borrowers Rs 250 per hour for wrongly blocking the device. RBI has also made it mandatory to give 21 days and additional seven days’ notice before restricting access to the device. Apart from this, RBI has also made it mandatory for recovery agents to carry identity cards. Agents can make recovery calls and visits between 8 am to 7 pm. Banks have been asked to set up a dedicated grievance redressal system for recovery related complaints. Recovery agents and banks cannot contact the borrower during events like bereavement or marriage.
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