RBI tightens rules for loan recovery agents: Call recording mandatory, abusive language banned – Details

RBI tightens rules for loan recovery agents: The Reserve Bank on Thursday has released draft rules governing the work of banks in the loan recovery system, making training for agents and recording of all calls mandatory. A bank must ensure that all phone calls made to a borrower by an agent are recorded, the RBI said, stressing that an agent interacts with a borrower in a "civil manner". The proposed guidelines ask banks to formulate guidelines on this subject and also ensure that customer information held by agents or employees is not misused.

"An employee/recovery agent shall interact with the borrower in a civil manner. Further, he / she shall maintain decency and decorum during visits to the borrower's place for collection / recovery of loan dues," the RBI said, as quoted by PTI.

The RBI is also considering requiring recovery agents to undergo debt recovery training from the Indian Institute of Banking and Finance (IIBF).

This draft follows Governor Sanjay Malhotra's announcement of the Monetary Policy Review last week. Previous incidents, such as the death of a borrower's family member during a loan recovery agent visit in Bihar, have prompted the RBI to urge lenders to be more cautious.

The draft rules announced on Thursday specifically mention that the recovery efforts should desist usage of abusive language, sending inappropriate messages.

In the draft rules, the central bank also proposed that the loan recovery efforts should not be undertaken at "inappropriate occasions" such as bereavement in the family or such other calamitous occasion, or marriage functions and festivals.

The Bank will also ensure that the recovery agencies hired by it, at the pre-engagement level and thereafter, carry out regular verification of the track record of its representatives/employees at pre-engagement level.

In cases where the subject matter of the borrower's loan dues is subjudice, the bank shall exercise "utmost caution" in referring the matter to its employee or recovery agents, it said.