The Reserve Bank of India has taken a decisive step to reform loan recovery practices, introducing stricter rules to curb harassment and ensure accountability among banks and recovery agents. The new framework mandates transparency in borrower communication, bans anonymous calls, and requires lenders to properly identify and monitor agents engaged in recovery processes.
From January 2027, banks will be held directly responsible for the conduct of their recovery agents, with clear guidelines on when and how borrowers can be contacted. The rules also require prior intimation before visits and provide for compensation in cases of misconduct, marking a shift towards borrower protection in a system long criticised for coercive practices.
This overhaul reflects a broader push to balance financial discipline with consumer rights. By setting enforceable standards, the RBI aims to restore trust in the lending ecosystem while ensuring that recovery mechanisms remain fair, ethical, and legally compliant.