A crackdown on loan recovery agents is set to intensify, with the Reserve Bank of India (RBI) introducing a proposal that restricts the hours during which recovery agents can contact bank and NBFC customers.
According to the RBI draft, recovery agents will not be allowed to call customers between 7 pm and 8 am.
The draft also advises against outsourcing core management functions, such as the KYC process and loan approval, to regulated entities like banks and NBFCs.
Key Highlights of the RBI Proposal:
Recovery agents must not contact bank and NBFC customers between 7 pm and 8 am.
Outsourcing core management functions to regulated entities is discouraged.
Recovery agents must implement a code of conduct for Direct Sales Agents/Direct Marketing Agents/Recovery Agents, subject to approval by the board.
Proper training of recovery agents is mandated, including customer interaction, call timing, and customer privacy.
Recovery agents and their teams are prohibited from harassing or misbehaving with customers to recover debts.
Impact on Customers:
This proposal aims to curb the excessive and often aggressive tactics employed by recovery agents, including sending misleading messages, making threats, and incessant calls.
The rule, if enacted, will protect customers from such practices and provide a defined time frame for agent communication (7 pm to 8 am).
RBI’s Ongoing Efforts:
The RBI has been actively addressing complaints about the behavior of recovery agents employed by NBFCs and banks.
While they have issued instructions to banks on this matter, the impact has been limited. Customers have reported misbehavior by recovery agents in the media, with some cases leading to unfortunate outcomes, including suicides by distressed customers.
This new proposal seeks to bring more accountability and restraint to the actions of recovery agents.
