Apex bank tames recovery agents
The RBI asked lenders to strictly ensure that their collection agents do not intimidate borrowers or resort to strong-arm tactics
Mumbai: Amid mounting complaints of harassment by banks’ recovery agents, the central bank on Friday issued tighter rules for their conduct and asked lenders to strictly ensure that their collection agents do not intimidate borrowers or resort to strong-arm tactics.
The Reserve Bank of India (RBI) asked regulated entities (banks, NBFCs, etc) to ensure that the recovery agents employed by them don’t call borrowers before 8:00 am and after 7:00 pm for recovery of overdue loans.
"It is advised that the lenders shall strictly ensure that they or their agents do 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 upon the privacy of the debtors' family members, referees and friends, sending inappropriate messages either on mobile or through social media, making threatening and/ or anonymous calls, persistently calling the borrower and/ or calling the borrower before 8:00 a.m. and after 7:00 p.m for recovery of overdue loans, making false and misleading representations, etc.,” the RBI said in a circular.
“Any violation in this regard...will be viewed seriously,” warned the central bank.
The 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 snstitutions, the RBI said.
It said the ultimate responsibility of banks for their outsourced activities vests with them and they are, therefore, responsible for the actions of their service providers including recovery agents.
Recovery agency is usually a third-party agency, appointed by a bank to collect customer's loan dues for a fee or a percentage of the total amount owed.
Many people are scared of recovery agents, because of their high-handed nature and illegal ways of collecting money.