Now Reading: RBI Tightens Loan Recovery Rules, Restricts Device Locking
-
01
RBI Tightens Loan Recovery Rules, Restricts Device Locking
The Reserve Bank of India has issued final rules making banks responsible for recovery agencies and outsourced loan collection. The framework takes effect on January 1, 2027. Banks must adopt board-approved recovery…
The Story in Brief
The Reserve Bank of India has issued final rules making banks responsible for recovery agencies and outsourced loan collection. The framework takes effect on January 1, 2027. Banks must adopt board-approved recovery policies, monitor agents, record recovery calls and provide dedicated grievance channels. Agents will need certification from the Indian Institute of Banking and Finance or a linked institute.
Banks cannot disable mobile phones, tablets or laptops for personal, car or home-loan defaults. Device restrictions are allowed only when the device itself was financed by the bank, after 30 days past due and with due notice. Full restriction can begin after 60 days. Incoming calls, SMS and emergency SOS must remain available. Banks must restore access within one hour of payment or pay Rs 250 per hour, subject to a cap equal to the loan amount.
The Indian Opinion
The loudest claims will paint the rules either as a free pass for banks or as a complete ban on digital recovery. Neither is accurate. The RBI permits narrow device controls but bars abusive calls, public humiliation, threats and disclosure of borrower data beyond recovery needs. The real test is whether banks publish agency details, preserve call records and pay compensation when access is restored late. How many complaints are resolved after January 1, 2027?
Sources (3): bfsi.economictimes.indiatimes.com, thefederal.com, ndtvprofit.com
This story was synthesised by AI from the 3 sources linked above.
Updated: this story now draws on 3 sources.
