Mounting complaints regarding the aggressive tactics of loan recovery agents have prompted the Reserve Bank of India (RBI) to reinforce its guidelines, clarifying what recovery agents can and cannot do. The updated rules, effective as of 2025, aim to protect borrowers from harassment and ensure that recovery processes are conducted with dignity and respect.

In recent years, India's digital lending boom led to instances where untrained recovery agents, particularly those from lesser-known apps, crossed ethical and legal boundaries. Harassment, public shaming, and even reported cases of suicide highlighted the urgent need for stricter regulations. The RBI's 2025 update directly addresses these issues, establishing a code of conduct that emphasizes accountability and legal protection for borrowers.

Key Changes in the RBI Guidelines:

• Mandatory Registration and Training: Recovery agents must now be certified and trained by an RBI-authorized body before they can operate. Banks and Non-Banking Financial Companies (NBFCs) are only permitted to hire registered professionals.
• Strict Contact Hours: Agents are restricted from contacting borrowers between 7 PM and 8 AM. Calls, messages, or visits outside these hours are considered harassment and can lead to regulatory penalties.
• Consent for Visits: Recovery agents cannot visit a borrower's home or workplace without prior consent. This measure aims to protect borrowers' privacy and prevent public embarrassment. The borrower has the right to decide the place of meeting.
• Professional Conduct: The RBI emphasizes that recovery agents must maintain professional conduct during all interactions with borrowers. Threats, abusive language, shouting, or any form of humiliation are strictly prohibited.
• Identification Required: Agents must carry identification cards and authorization letters from the lender, which they must show to the borrower upon request.
• Grievance Redressal: Lenders are required to have a transparent grievance redressal mechanism to address borrower complaints. Borrowers can escalate their complaints to the RBI Ombudsman if the lender fails to respond within 30 days.
• Digital Recording of Interactions: All recovery interactions, including calls, texts, and visits, must be digitally recorded. Borrowers can request these records from the lender, and the unavailability of such records constitutes a violation.
• 30-Day Notice Period: Lenders must provide borrowers with a written notice of 30 days before appointing recovery agents. This notice period allows borrowers time to arrange funds, negotiate repayment terms, or seek financial counseling.

Borrower Rights:

Borrowers have the right to:

• Receive written notice before any recovery action is taken.
• Choose the meeting place and time within the permitted hours.
• Be heard and negotiate repayment terms, including moratoriums or one-time settlements.
• Be treated with dignity and privacy, free from verbal abuse, public shaming, or workplace disclosures.
• Complain to the lender's nodal officer, the RBI Integrated Ombudsman, the police, or a consumer forum.
• Receive compensation for proven harassment or wrongful asset seizure.

What to Do If Harassed:

If a borrower faces harassment from recovery agents, they should:

• Document all interactions, including saving messages and recording calls.
• File a complaint with the lender's grievance redressal officer.
• Escalate the issue to the RBI Ombudsman if the lender doesn't respond adequately.
• File a First Information Report (FIR) at the nearest police station.
• Seek legal counsel.

The RBI's strengthened guidelines empower borrowers to stand up against unfair recovery practices. By understanding their rights and reporting violations, borrowers can contribute to a fairer and more ethical lending environment.