The Reserve Bank of India (RBI) has announced stricter rules to protect loan customers from harassment by recovery agents and bank staff.
In recent years, many people complained about mental pressure, threats, abusive behavior, and even physical assault during loan recovery.
To stop such practices, the RBI has released a draft with tougher guidelines for banks and NBFCs. These new rules are expected to bring major relief to borrowers across the country.
Harassment and Threats Declared Illegal
Under the new RBI draft, recovery agents will no longer be allowed to use harsh or cruel methods while recovering loans.
The RBI has clearly said that threatening customers, guarantors, relatives, or friends is illegal. Agents will also not be allowed to:
Make threatening calls from unknown numbers
Use abusive or insulting language
Mentally or physically intimidate borrowers
Upload call recordings or personal details on social media
The central bank has termed these actions as “coercive and harsh practices” and warned banks against allowing such behavior.
Police Verification of Recovery Agents Mandatory
Many banks and NBFCs hire local people as recovery agents. In several cases, these agents have been accused of threatening or assaulting customers.
To control this issue, the RBI has now made police verification compulsory for all recovery agents. People with criminal backgrounds or suspicious records will not be allowed to work as loan recovery agents.
ID Card and Training Now Compulsory
The RBI draft also says that every recovery agent must have a valid certificate from the Indian Institute of Banking and Finance (IIBF).
Whenever an agent visits a customer’s home, they must carry:
Their agency ID card
An official authorization letter from the bank
A copy of the recovery notice
Agents will also have to inform customers at least one day before visiting their home.
No Recovery Calls During Mourning or Celebrations
The RBI has also focused on customer dignity and privacy. According to the draft rules, recovery agents cannot contact borrowers during sensitive occasions like:
Mourning in the family
Weddings or other auspicious events
The RBI has also fixed the timing for recovery-related calls. Banks and agents can now contact customers only between 8 AM and 7 PM.
When Will These Rules Start?
The new rules are currently in draft form, but they may come into effect from October 1, 2026.
Once implemented, these guidelines are expected to reduce harassment and improve the loan recovery process for customers.
Banks Will Be Fully Responsible
The RBI has made it clear that banks cannot escape responsibility by blaming third-party recovery agencies.
If any recovery agent misbehaves, the bank itself will be held directly responsible. Banks will also have to publicly share the names of all registered recovery agencies on their websites and mobile apps.
