New Delhi: The Reserve Bank of India has introduced stricter rules governing loan recovery practices, with a focus on protecting borrowers from harassment, intimidation and misuse of personal information. The new framework will come into effect from January 1, 2027 and will apply to banks and other regulated lenders.
Under the revised norms, recovery agents will generally be allowed to contact borrowers only between 8 am and 7 pm. Calls outside these hours will require specific consent from the borrower. Agents have also been instructed to avoid contacting borrowers during sensitive situations such as medical emergencies, bereavement or marriage functions.
The RBI has prohibited threatening, abusive or intimidating behaviour during recovery. Agents cannot repeatedly call borrowers, publicly shame them, threaten their families or reputation, or misuse social media to expose personal details, photographs, videos or recordings.
Before making a first physical recovery visit, agents must provide borrowers with at least one day’s notice and disclose the identity of the recovery agency. Agents must carry proper identification, an authorisation letter and the relevant notice.
Banks will also be required to maintain records of recovery communications, including call timings and phone numbers. Recovery conversations must be recorded and preserved for at least six months. Lenders will remain responsible for the conduct of outsourced recovery agencies.
The framework also introduces safeguards for borrower data, limiting recovery agents to information necessary for loan recovery.
The new rules also cover remote restrictions on financed smartphones, tablets and laptops. Such action will be permitted only when the device was purchased through the relevant loan and cannot be applied to an existing device under a regular personal loan.
A device cannot be restricted immediately after an EMI default. Restrictions may begin after 30 days of overdue status, while complete restriction can be imposed only after 60 days.
Essential services such as incoming calls, SMS and emergency communication must remain accessible. Lenders are also barred from accessing unrelated contacts, photographs, videos, call records or location data.
Once overdue payments are cleared, restricted devices must normally be restored within one hour, with compensation applicable for delays under the prescribed conditions.
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