The Reserve Bank of India on 12th August 2022, has issued a circular advising the regulated entities (REs) to 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 8:00 a.m. and after 7:00 p.m. for recovery of overdue loans, making false and misleading representations, etc.
This circular shall apply to the following REs:
- All Commercial Banks (including Local Area Banks, Regional Rural Banks, and Small Finance Banks) excluding Payments Banks;
- All All-India Financial Institutions (viz. Exim Bank, NABARD, NHB, SIDBI, and NaBFID);
- All Non-Banking Financial Companies including Housing Finance Companies;
- All Primary (Urban) Co-operative Banks, State Co-operative Banks, and District Central Co-operative Banks; and
- All Asset Reconstruction Companies.
The Reserve Bank of India has been addressing the issues relating to recovery agents (RAs) engaged by the Regulated Entities (REs), viz., Scheduled Commercial Banks, Non-Banking Financial Companies, etc., and the methods and practices being followed by these agents while undertaking loan recovery activities. The Reserve Bank of India, as part of guidelines on Fair Practices Code (FPC), has already advised REs that they should not resort to intimidation or harassment of their borrowers, calling them on phone at odd hours in their debt collection efforts, etc.
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.
