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New RBI Monetary Policy Updates: The Reserve Bank of India (RBI) has now taken a big decision to curb the arbitrariness of loan recovery done by banks and NBFCs. Governor Sanjay Malhotra has announced after the meeting of the Monetary Policy Committee that comprehensive draft guidelines for this will be presented soon. The aim of the new rules is to prevent coercion by recovery agents and completely eliminate unfair treatment of customers. Along with this, RBI is also going to adopt a very strict stance to prevent mis-selling of financial products at bank counters.

Crackdown on recovery agents

RBI has clarified that at present, different instructions are in force for different regulated entities regarding loan recovery and behavior of agents. The central bank has now taken an important decision to review all these old rules and issue uniform strict guidelines. With this step, it will now be mandatory for banks and NBFCs to use only legal and respectable methods during loan recovery.

Strict rules on mis-selling

It is often seen that in the greed for commission, banks sell such third party products to customers which they do not need. RBI has said that the products sold now should be in accordance with the actual needs of the customers and their risk taking capacity. To prevent mis-selling, detailed and comprehensive instructions regarding marketing, advertising and sales are going to be issued soon.

Repo rate and monetary policy

Governor Sanjay Malhotra, in the meeting held on February 6, has announced to keep the current repo rate stable at 5.25 percent without any change. Along with keeping the repo rate stable, RBI’s entire focus is now on strengthening consumer protection. Experts believe that with the setting of these new benchmarks, there will be a significant reduction in disputes and legal cases to recovery in future.

Responsibility of lenders will increase

According to legal experts, after the release of new compliance guidelines, the accountability of lending banks and financial institutions will increase significantly. Now banks will have to monitor the behavior of their recovery agents and banks will be held responsible for any kind of coercion. This will not only increase customers’ trust in the banking system but will also ensure transparency and discipline in the financial sector.

Customers will benefit greatly

This move by RBI will free the common man from mental and physical harassment of recovery agents who use unfair methods. Apart from this, due to transparency in insurance and other investment products sold by banks, the financial loss of the customers will also reduce significantly. These guidelines will prove to be a revolutionary and big step towards making the financial services ecosystem more secure and customer-centric.