Amidst growing complaints of misconduct by recovery agents, the RBI has taken a major step. The new proposal aims to ensure that banks recover their dues, while remaining within the bounds of law and humanity.

The Reserve Bank of India, the country's regulatory bank, has issued a draft of strict and transparent rules regarding the loan recovery process. The RBI has taken this step amid increasing complaints of misconduct by recovery agents in recent years. The new proposal aims to ensure that banks recover their dues, while remaining within the bounds of law and humanity. In recent years, numerous cases have surfaced in which recovery agents have been accused of threats, abuse, harassment of families, and undue pressure. In light of this behavior, the RBI has issued a draft of the Second Amendment Direction 2026. Suggestions have been sought on these rules; upon approval, they will be implemented. Furthermore, this new system is set to be implemented from July 1, 2026.

Banks' Responsibilities Will Be Fixed

According to the Reserve Bank of India's new provisions, every bank will now be required to develop a written recovery policy. This includes the appointment, qualifications, verification, code of conduct, and monitoring of agents. Banks will also be required to publicly list authorized recovery agents on their websites, mobile apps, and in branches, so that customers are aware of their authorized credentials. Furthermore, if a customer files a complaint, the case will not be assigned to a recovery agent until the complaint is resolved, i.e., a hearing will take place first, followed by recovery.

Stricter Rules for Recovery Agents

Following the RBI's new regulations, recovery agents will only be able to contact people between 8 a.m. and 7 p.m. Agents will also be required to respect borrowers' personal lives. Agents will be required to avoid calling or visiting borrowers on occasions such as weddings, mourning, or festivals. Harassing relatives, friends, or colleagues will also be strictly prohibited. A receipt will be mandatory after every payment. Banks will also be required to maintain records of how often and at what times the borrower has been contacted. Additionally, the conversation will be recorded, information about which will be provided to the customer. The RBI has also clarified that recovery agents must obtain a debt recovery agent training certificate from the Indian Institute of Banking and Finance. Without this training and certification, no one will be permitted to participate in the recovery process. Furthermore, threats, abuse, false legal information, social media pressure, or attempts to defame by recovery agents will be strictly prohibited. Customer personal information will only be shared to the extent necessary for recovery.