RBI directs use of diligence in hiring recovery agents

While engaging recovery agents, the Reserve Bank of India (RBI) has asked the banks to put due diligence process in place for engagement of recovery agents, which should be so structured to cover, among others, individuals involved in the recovery process.

To ensure due notice and appropriate authorization by the banks, the banks should inform the borrower the details of recovery agents engaged for the purpose, while forwarding default cases to the recovery agents.

The details should include their telephone numbers etc. The recovery agents should call the borrowers only from telephone numbers notified to the borrower, said RBI in its draft guidelines for banks on recovery agents released on Friday.

Also, each bank should have a mechanism whereby the borrowers’ grievances with regard to the recovery process can be addressed. The details of the mechanism should also be furnished to the borrower while advising the details of the recovery agent, said RBI.

?Among others, the banks should ensure that the recovery agents are properly trained to handle with care and sensitivity, their responsibilities, in particular aspects like hours of calling, privacy of customer information etc,?? said RBI.

RBI has has also requested the Indian Banks? Association to formulate, in consultation with Indian Institute of Banking and Finance (IIBF), a certificate course for direct sales agents or direct marketing agents or recovery agents witha minimum 100 hours of training.

Once the above course is introduced by IIBF, banks should ensure that over a period of one year all their recovery agents undergo the above training and obtain the certificate from the above institute. Further, the service providers engaged by banks should also employ only such personnel who have undergone the above training and obtained the certificate from the IIBF.

Banks are also advised that they should preferably use the forum of Lok Adalats for recovery of personal loans, credit card loans or housing loans with less than Rs10 lakh as suggested by the Supreme Court.

Where banks have incorporated a re-possession clause in the contract with the borrower and rely on such re-possession clause for enforcing their rights, they should ensure that such repossession clause is legally valid, is clearly brought to the notice of the borrower at the time of execution of the contract.