Banking Central | Borrowers deserve freedom from harassment

On August 12, the Reserve Bank of India (RBI) issued a set of rules that are meant to ensure fairness in banker-borrower dealings. The fresh instructions barred recovery agents from resorting to intimidation of borrowers. Putting it in perspective, the RBI said recovery agents cannot call borrowers before 8 am and after 7 pm. While issuing additional instructions to regulated entities including banks, NBFCs and Asset Reconstruction Companies, the RBI also noted that recovery agents are deviating from its instructions regarding recovery of loans.

The observations are critical as there are a number of cases reported from across the country in recent years where borrowers resort to extreme steps following persistent harassment by recovery agents. It is in this context the RBI said the regulated entities 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.

While the latest RBI directions are a step in the right direction but the problem lies with implementation on the ground. In the past too, the RBI has reminded banks about the need to ensure fairness in customer transactions but these warnings have fallen in deaf ears.