The Reserve Bank of India on Thursday proposed tightening guidelines for lenders engaging agents to recover loans. The draft guidelines follow the announcement made by RBI Governor Sanjay Malhotra in the monetary policy review on February 6.
The proposed norms cover aspects such as fair treatment to borrowers during the recovery process, conduct of lender’s employees and recovery agents and due diligence. Recovery agents must avoid violating borrowers’ privacy, refrain from visits and calls during inappropriate occasions such as weddings and avoid any harsh methods towards recovery.
The draft proposes that lenders put in place a structure to monitor and control the activity of recovery agents and ensure that they refrain from actions that could damage their integrity and reputation.
Revamping Kisan Credit Card scheme
The central bank also issued draft guidelines on the Kisan Credit Card (KCC) scheme, aimed at expanding coverage, streamlining operational aspects and addressing emerging sectoral requirements.
The RBI said existing loans sanctioned before the date of issuance of the guidelines will continue to be governed by the current guidelines. New guidelines will be applicable to such loans from the date of next review or renewal of the facility.
To standardise loan sanction and repayment schedules, crop seasons have been defined in terms of months, with short-duration crops pegged at 12 months and long-duration ones at 18 months. To ensure better alignment of loan tenure with crop cycles, especially for long-duration crops, the tenure of KCC has been extended to six years. To ensure farmers receive credit based on actual cultivation costs, drawing limits under KCC has been aligned with the scale of finance prescribed for each crop season.
The RBI has sought comments on both the draft guidelines by March 6.