The Reserve Bank of India has proposed stricter rules for banks and financial institutions that use recovery agents to collect loans.
The move comes after RBI Governor Sanjay Malhotra highlighted the issue during the monetary policy review on February 6.
The new draft guidelines aim to protect borrowers and bring more discipline to the loan recovery process.
Stricter Rules for Loan Recovery Agents
Under the draft rules, lenders must ensure fair treatment of borrowers during recovery.
Recovery agents will not be allowed to:
Violate a borrower’s privacy
Visit or call during inappropriate occasions like weddings
Use harsh or aggressive methods
Banks and financial institutions will also need to closely monitor the behavior of their recovery agents.
They must set up proper systems to control and review their activities.
The goal is simple: protect borrowers from harassment and maintain the reputation and integrity of lenders.
The RBI has invited public comments on these proposed rules until March 6.
Major Changes in Kisan Credit Card Scheme
Along with recovery norms, the RBI has also proposed changes to the Kisan Credit Card (KCC) scheme to make it more farmer-friendly.
The new draft focuses on expanding coverage, simplifying processes, and aligning loans better with crop cycles.
Key changes include:
Crop seasons are now clearly defined in months
Short-duration crops: 12 months
Long-duration crops: 18 months
KCC loan tenure extended to six years
Loan limits aligned with actual cultivation costs
This means farmers will get credit based on real farming expenses and crop timelines, making repayment more practical.
Existing loans will continue under the old rules. The new guidelines will apply at the time of renewal or review.
With these proposals, the RBI is trying to balance two key goals — protecting borrowers from unfair recovery practices and making agricultural credit more structured and efficient.
