Now Reading: RBI tightens loan recovery rules, limits device blocking
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RBI tightens loan recovery rules, limits device blocking
The RBI has issued final rules making banks responsible for recovery agents and outsourced loan recovery, with norms taking effect on January 1, 2027. Banks must adopt board-approved recovery policies, monitor agencies,…
The Story in Brief
The RBI has issued final rules making banks responsible for recovery agents and outsourced loan recovery, with norms taking effect on January 1, 2027. Banks must adopt board-approved recovery policies, monitor agencies, record recovery calls and provide grievance channels. Agents need certification from the Indian Institute of Banking and Finance or a tied-up institute. Abusive language, threats, public shaming, excessive calls and contacting borrowers’ relatives or colleagues are banned.
Banks cannot disable mobile phones, tablets or laptops for personal, car or home loan recovery. Device restrictions are allowed only when the lender financed that device, and must be gradual. Incoming calls, SMS and emergency SOS must continue. Restrictions must be reversed within one hour of payment, with compensation of Rs 250 per hour for bank-caused delays, subject to a cap equal to the loan amount.
The Indian Opinion
The lazy narrative that borrowers will now escape repayment is wrong. The rules govern conduct, not the debt itself. Equally, treating every recovery agent as a bully ignores the need to collect genuine dues. The real test is enforcement: whether banks publish agency details, preserve call records and pay compensation when warranted. Borrowers should watch how many complaints are resolved and how often penalties follow violations after January 1, 2027.
Sources (2): bfsi.economictimes.indiatimes.com, thefederal.com
This story was synthesised by AI from the 2 sources linked above.
