Troubled by Debt Collectors using unscrupulous means for recovery! Know your rights here as per RBI guidelines

Dealing with financial trouble is stressful enough. But when a debtor is hounding you using unethical methods, it can make matters even worse. The fact is, you have some rights when it comes to dealing with debt collection agencies.


(Ref.DBOD.No.Leg.6723/09.07.005/2007-08 dated November 30, 2007)

Recovery Agents engaged by banks – Draft guidelines

There has been rise in the number of litigation against banks & adverse publicity in the recent past for engaging recovery agents. The consequent likely implications for reputation risk not only for the bank concerned but also for the banking sector as a whole has necessitated a review of the policy, practice & procedure involved in engagement of recovery agents by banks in India.

In this backdrop, the Reserve Bank proposes to issue the following operational guidelines for adoption by all commercial banks. A reference to “agent” in this guidelines would include agencies include by the bank. Their agents/employees, as well as the Banks’ own employees. Engagement of recovery agents.

the following specific aspects Banks are advised to take into account while engaging recovery agents:
  • Banks should have due diligence process in place for engagement of recovery agents. It will be structured to cover, among others, individuals involved in the recovery process.
  • To ensure due notice and appropriate authorization by the banks, they should inform the borrower the details of the recovery agents engaged for the purpose, while forwarding the default cases to 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.
  • Banks are advised to ensure that the contracts with the recovery agents do not induce adoption of uncivilized, unlawful and questionable behaviour or recovery process.
  • The following terms are being advised to Banks in the matter of recovery of loans:

(a) The lenders should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.

(b) The banks should ensure that agents engaged by them for debt collection refrain from action/s that could damage the integrity and reputation of the bank.

(c) Their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their, debt collection efforts, including acts intended to humiliate publicly or intrude into the privacy of the borrowers’/ credit card holders‘ family members, referees, and friends making threatening and anonymous calls or making false and ‘misleading representations.

  • Reserve Bank has requested the Indian Banks’ Association to formulate, in consultation with Indian Institute of Banking and Finance (IIBF), a certificate course for Direct Sales Agents / Direct Marketing Agents / Recovery Agents with minimum 100 hours of training. The above course is introduced by IIBF, banks should ensure that over a period of one year all their Recovery Agr – its undergo the above training and obtain the certificate from the above institute.

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