The Reserve Bank of India (RBI) has directed banks to provide customers with written details of the recovery agents assigned to their cases, ensure that agents are not given sales‑style targets that may push them toward harsh recovery practices, and refrain from engaging recovery agents in cases where the customer has already lodged a grievance with the bank.
In draft guidelines released on engagement of recovery agents by banks and housing finance companies, RBI said banks must ensure that recovery agents engaged by it should have a certificate from Indian Institute of Banking and Finance (IIBF) or any other institute having a tie up with the IIBF.
Banks must prominently display an up-to-date list of recovery agents engaged with it on all channels including details like names and period of engagement. In the event of termination of the agreement with a recovery agent for any reason, the bank shall publicize the same to ensure that the borrowers do not continue to deal with that agent or its representatives.
“While forwarding cases to any agent for recovery of default amount, the bank shall inform the details of the recovery agent to the borrower through a written notice, either through a letter to his / her current address or SMS on registered mobile number or email on registered email address…In case of change of recovery agent during an ongoing recovery process, the bank shall immediately notify the borrower of the change,” RBI said. The draft guidelines are open for public comments till March 6 and are likely to be implemented by July 1.
In cases where the subject matter of the borrower’s loan dues is sub-judice, the bank shall exercise caution, in referring the matter to its employee or recovery agent. Banks shall document the time and number of calls made by employees or recovery agents to the borrower. Banks also ensure recording of the content / text of the calls made by the recovery agent.
Any legal or other recovery measures including taking possession of the security should be initiated only after giving due notice in writing as per applicable provisions. Legal action shall not be the first resort for recovery, RBI said.
The central bank has also listed prohibited harsh methods of recovery like use of abusive language, sending inappropriate messages either on mobile or through social media, calling the borrowers outside the prescribed hours of 8 am to 7 pm, intimidating relatives, friends or co-workers verbally or physically, threatening violence or other similar means to their family, assets or reputation or making false or misleading representations to the borrower about the extent of the debt or the consequences of nonrepayment.
Banks also have to have a detailed mechanism for redressal of recovery related grievances which have to be provided to the borrower under the loan agreement. All recovery related communications issued by the bank must contain the name, email address, telephone number and address of the grievance redressal officer concerned of the bank.
