The Reserve Bank of India (RBI) guidelines on having a bank approved policy on recovery agents will now come into effect from January 1, 2027 giving banks and other regulated entities more time to modify systems, workflows and train recovery agents.
Entities newly brought under the mandatory certification requirement will get an additional one year from the effective date for their existing recovery agents to obtain certification. The rules do not pertain to use coercive method for recovery, detailed guidelines of which were issued earlier this year.
The RBI said the rules will not apply to banks’ own employees engaged in recovery activities or to collection agents who merely collect regular loan instalments. Law firms engaged for drafting legal notices or representing lenders in courts will also remain outside the ambit of the recovery agent framework.
On outsourcing, the RBI clarified that while recovery agencies may subcontract activities where permitted under outsourcing regulations, regulated entities will remain responsible for ensuring compliance with RBI’s outsourcing norms.
Further, it has accepted suggestions that restrictions imposed on financed devices should not prevent borrowers from carrying out work or employment-related activities and that borrowers should be able to view the status of restrictions imposed on their devices.
For technology-enabled recovery in financed mobile devices, the RBI has accepted the suggestion that device-locking software should be certified by the original equipment manufacturer (OEM) or the operating system platform provider before deployment.
The RBI said regulated entities should retain flexibility to frame their own compensation policies based on individual circumstances and that prescribing illustrative scenarios or compensation caps could be restrictive.