What changed
RBI finalized guidelines after public feedback, replacing draft rules. Banks must now verify agent antecedents, tape-record recovery calls, and post agency details on websites. Grievances must be resolved before forwarding cases, unless complaints are frivolous.
What it means for you
Banks face stricter oversight to curb disputes and litigation from aggressive recovery practices. This raises compliance costs but protects sector reputation. Lenders must update outsourcing policies and train staff on new protocols to avoid penalties.
What you must do
- Implement due diligence for recovery agents, including police verification of their employees.
- Inform borrowers of agency details and ensure agents carry authorization letters and ID cards.
- Tape-record all recovery calls and notify customers of recording.
- Post updated list of recovery agencies on your bank's website.
- Establish a grievance mechanism and halt recovery actions until complaints are resolved, unless proven frivolous.
Who it affects
All scheduled commercial banks (excluding RRBs), Recovery agencies and their employees, Borrowers with delinquent loans
What happens if a borrower files a complaint during recovery?
Banks must not forward the case to recovery agents until the complaint is resolved, unless the bank has proof the complaint is frivolous or vexatious.
Are banks required to record all recovery calls?
Yes, banks must ensure tape recording of calls between recovery agents and customers, and may inform customers that the conversation is being recorded.