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Thursday, February 22 2024
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RBI tightens norms for loan recovery agents

RBI tightens norms for loan recovery agents
Photo Credit : IANS

Mumbai: The Reserve Bank of India (RBI) on Friday has said companies need to ensure that their recovery agents do not resort to harassment of any person while collecting debts.

The timing for call for recovery has been set between 8 a.m. and 7 p.m.

“It has been observed that the agents employed by REs have been deviating from the extant instructions governing the outsourcing of financial services,” the RBI said in a release.

“In view of concerns arising from the activities of these agents, it is advised that the REs shall strictly ensure that they or their agents do not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude upon the privacy of the debtors’ family members, referees and friends, sending inappropriate messages either on mobile or through social media, making threatening and/or anonymous calls, persistently calling the borrower and/ or calling the borrower before 8 a.m. and after 7 p.m. for recovery of overdue loans, making false and misleading representations, etc,” it added.

“The extant guidelines on permissible hours for calling borrowers on phone for recovery purpose are currently specified in respect of Housing Finance Companies and REs extending microfinance loans. Taking into account certain recent developments including growing incidences of unacceptable practices followed by REs, the Reserve Bank of India has issued certain additional instructions to REs by extending the scope of the guidelines,” the circular said

Earlier, the attention of the RBI Governor has been drawn to the recovery methods used by some companies while collecting debts.

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