Mumbai: The Reserve Bank of India (RBI) is planning to introduce new rules to make the loan recovery process more transparent and customer-friendly. The proposed guidelines aim to stop harassment by recovery agents and improve the protection of borrowers’ privacy and dignity.
If implemented, the new rules could come into effect from October 1, 2026. The rules will apply to all commercial banks, but small finance banks, payment banks, regional rural banks and local area banks will remain outside their scope.
Fixed Timing For Calls And Visits
Under the proposed rules, recovery agents will only be allowed to contact customers between 8 am and 7 pm. Calls or visits outside these hours will not be permitted unless the customer specifically requests it.
The RBI has also proposed strict action against repeated calls, abusive language, threats or attempts to shame customers on social media. The aim is to ensure that borrowers are treated respectfully during the recovery process.
Training And Verification For Recovery Agents
The RBI may make training mandatory for all recovery agents. Agents could be required to complete training through the Indian Institute of Banking and Finance (IIBF) or other approved institutions.
Recovery agencies may also have to conduct proper background verification of their employees before assigning them recovery work.
Customers Must Receive Advance Information
Banks will need to publish updated lists of all recovery agencies on their websites and digital platforms.
Customers must also receive information at least one day before any recovery visit. If a recovery agency is changed or removed, customers will have to be informed about it.
Strict Rules On Mobile Locking And Data Access
The RBI has clearly said that banks and recovery agents cannot randomly lock a customer’s mobile phone for loan recovery.
Phone features may only be restricted if the mobile device itself was financed by the bank or finance company. Even in such cases, emergency calls and important alerts must continue working.
If a customer clears the loan and mobile access is not restored on time, banks may have to pay compensation of Rs 250 per hour for the delay.
Complaint System And Data Protection
Banks will also have to record all recovery-related conversations and create a proper complaint resolution system.
If a customer complaint is pending, recovery action may have to stop until the issue is resolved. The RBI has also made it clear that banks and recovery agents cannot access or misuse data stored on customers’ mobile phones.
