Not being able to repay bank loans on time due to financial crisis or some unfortunate incident often becomes a cause of mental torture for common people. Incidents like threats by recovery agents over the phone, defaming relatives and visiting homes and offices and behaving indecently have been continuously coming to light. To put a complete stop to this hooliganism and unfair behavior, the Reserve Bank of India (RBI) has made the Fair Practices Code and recovery guidelines more stringent. Under the new guidelines, even if a borrower is unable to pay EMI on time, it will be the legal responsibility of the bank and recovery agents to protect his privacy, respect and dignity.
No phone calls will be accepted between 8 am and 7 pm, and privacy must be respected.
According to new regulations issued by the Reserve Bank, banks or their authorized agencies cannot call or visit customers’ homes for loan recovery before 8:00 am and after 7:00 pm. Furthermore, recovery agents cannot make persistent calls (spam calls) to harass customers. Most importantly, agents cannot call customers’ friends, relatives, neighbors, or colleagues at work to disclose their debts. Disclosure of personal information without customer permission is now strictly illegal and a punishable offense.
Recovery agency’s license will be cancelled if it threatens or behaves rudely.
The RBI has clarified that no bank, non-banking financial company (NBFC), or recovery agent can physically, mentally, or verbally harass a customer. Loan default is a civil matter, not a criminal offense. Therefore, agents cannot go to a customer’s home and abuse, use force, or forcibly seize property. If a recovery agent oversteps the bounds or engages in hooliganism, the customer can directly file a complaint with the bank’s Ombudsman or on the RBI’s CMS Portal. If found guilty, the bank will be heavily fined, and the recovery agency’s license will be permanently revoked.
Customers facing financial hardship will get an opportunity for restructuring and relief
The new guidelines also direct banks to adopt a sympathetic approach towards distressed customers. If a farmer, salaried employee, or small businessman is unable to repay a loan due to job loss, illness, or business losses, the bank must offer the option of loan restructuring, EMI reduction, or tenure extension. Furthermore, recovery agents must carry an official bank identification card and authorization letter, which the customer reserves the right to inspect.
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