Banks to ensure recovery agents refrain from harassing borrowers: RBI

“It has been observed that the agents employed by REs have been deviating from the extant instructions governing the outsourcing of financial services,” the central bank said in a notification.

Banks to ensure recovery agents refrain from harassing borrowers: RBI
“These instructions will be applicable to all commercial banks (including regional rural banks), co-operative banks, non-banking financial companies (NBFCs), asset reconstruction companies (ARCs) and all India financial institutions,” it added.

By Shashank Didmishe

The Reserve Bank of India (RBI) on Friday said that the banks and other financial institutions should ensure that their recovery agents do not harass or intimidate their borrowers while noting that such agents deviate from the instructions issued by the central bank.

The RBI has listed the various forms of harassment employed by the recovery agents, which includes public humiliation, privacy intrusion of the borrower or their family member or acquaintances, sending inappropriate messages telephonically or through social media, making threatening and anonymous calls, making false and misleading representations and calling persistently at odd hours for recovery of loans.

“It has been observed that the agents employed by REs have been deviating from the extant instructions governing the outsourcing of financial services,” the central bank said in a notification.

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“These instructions will be applicable to all commercial banks (including regional rural banks), co-operative banks, non-banking financial companies (NBFCs), asset reconstruction companies (ARCs) and all India financial institutions,” it added.

The guidelines on permissible hours for calling borrowers specified in respect of housing finance companies and lenders giving microfinance loans. Other financial institutions include Exim Bank, National Bank for Agriculture and Rural Development (NABARD), The National Bank for Financing Infrastructure and Development (NaBFID), National Housing Board (NHB) and Small Industries Development Bank of India (SIDBI).

The harsh methods used by the banks and other lenders were already under RBI scanner as Governor Shaktikanta Das had highlighted the issue at an event in June. The RBI is receiving several complaints from borrowers on severe steps taken by the agents, without adequate checks and controls from banks, Das had said. While agents are used to calling borrowers even past midnight, RBI had got complaints of use of foul language.

“Such kind of action by recovery agents is unacceptable and poses reputational risk for the financial entities themselves. We have taken serious note of such instances and will not hesitate to take stringent action in cases where regulated entities are involved,” Das had said.

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