The Reserve Bank of India (RBI) has released new guidelines for bank loan recovery agents. The important points are as listed below:
A bank shall ensure that recovery agents engaged by it have obtained the certificate from Indian Institute of Banking and Finance (IIBF) after completing the training programme for Debt Recovery Agents offered by IIBF or any other institute having a tie-up arrangement with IIBF.
A bank shall prominently display an up-to-date list of recovery agents empanelled and engaged with it on all channels through which it engages with customers, viz., branches / offices or digital platforms such as website, mobile app, etc. Such list shall include the name of the recovery agents and details of the individual(s) engaged by it, the period of engagement, etc.
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, as the case may be, to ensure due intimation and proper authorization. In case of change of recovery agent during an ongoing recovery process, the bank shall immediately notify the borrower of the change.
A bank shall ensure that the disclosure of borrower’s information to its employees / recovery agents is limited to the extent required to enable them to discharge their loan recovery related duties. Further, the bank shall put in place mitigants to ensure that its employees / recovery agents do not transfer or misuse any customer information in any manner.
A bank shall document the time and number of calls made by its employee / recovery agent to the borrower / guarantor for recovery of loan dues. Further, the bank shall ensure that there is a recording of the content / text of the calls made by the employee / recovery agent to the borrower / guarantor and vice-versa. Further, the bank shall take reasonable precautions such as intimating the borrower / guarantor that the conversation is being recorded, etc.
A bank shall ensure that the recovery targets or the structure of incentives in the contract with the recovery agent do not induce adoption of harsh recovery practices.
Respect for borrower’s privacy: An employee / recovery agent shall interact only with the borrower or the guarantor and shall not approach any other relatives / contacts of the borrower.
Maintaining hours of contact: An employee / recovery agent shall contact / visit the borrower / guarantor only between 08:00 hours and 19:00 hours. Further, the borrower’s request to avoid call / visit at a particular time shall be honoured in normal circumstances.
Place of contact: An employee / recovery agent shall ordinarily contact a borrower at the place of the borrower’s choice and in the absence of any specific choice, at the place of his / her residence and if unavailable at his / her residence, then at the place of business / occupation.
Avoiding recovery calls / visits during inappropriate occasions: An employee / recovery agent shall avoid inappropriate occasions such as bereavement in the family or such other calamitous occasion, or marriage functions, festivals, etc. for making calls / visits to collect / recover loan dues.
Designated place for collection / recovery of microfinance loans: In case of microfinance loans, collection / recovery shall be made at a designated / central designated place decided mutually by the borrower and the bank. However, field staff shall be allowed to make collection / recovery at the place of residence or work of the borrower if the borrower fails to appear at the designated / central designated place on two or more successive occasions.
Interaction with borrower: An employee / recovery agent shall interact with the borrower in a civil manner. Further, he / she shall maintain decency and decorum during visits to the borrower’s place for collection / recovery of loan dues.
Visit to borrower’s premises: Only the representative(s) authorised by the bank shall visit the borrower’s premises for activities related to collection / recovery of loan dues.
Approval for written communication: Written communication, if any, sent by an employee / recovery agent to the borrower / guarantor shall have the approval of the bank.
Issue of acknowledgement / receipt: An employee / recovery agent shall promptly give proper acknowledgement / receipt on collection / recovery of loan dues from the borrower / guarantor.
The bank’s employee / recovery agent shall not engage in any harsh methods towards recovery. Without limiting the general application of the foregoing, following practices shall be deemed as harsh:
- Use of minatory or abusive language;
- Sending inappropriate messages either on mobile or through social media;
- Excessively calling the borrower / guarantor and / or calling outside the prescribed hours;
- Making threatening and / or anonymous calls;
- Intimidating or harassing the borrower / guarantor and / or his / her relatives, referees, friends, or co-workers in either verbal or physical manner, including acts intended to humiliate them publicly or intruding upon their privacy;
- Use or threat of use of violence or other similar means to harm the borrower / guarantor or their family / assets / reputation;
- Making false or misleading representations to the borrower / guarantor, especially about the extent of the debt or the consequences of non-repayment.
A bank shall have a dedicated mechanism for redressal of recovery related grievances. The details of this mechanism shall be provided to the borrower by including the same under the loan agreement and while advising the details of the recovery agent to the borrower.
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