No calls after 7 pm: New RBI norms offer shield against harassment by recovery agent

Recovery agent

• RBI sets new rules for loan recovery, effective July 1, 2026
• No recovery calls after 7 PM; agents need mandatory certification
• Banks need formal policies and grievance redressal for recovery.

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The Reserve Bank of India (RBI) has proposed changes to the framework governing how lenders recover loan dues and appoint recovery agents. The norms clearly define what will be treated as "harsh recovery practices", specify no calls after 7 pm, require mandatory certification for recovery agents and lay down detailed procedures for taking possession of secured assets.

The revised directions will take effect from July 1 and will apply to all commercial banks, small finance banks, payments banks, regional rural banks and local area banks. These directions are a part of one of announcements made by the RBI governor in the monetary policy statement last week.

The RBI has also directed all banks to establish a formal, board-approved policy governing the engagement of recovery agents. Lenders must clearly outline the process for appointing agents, set standards for acceptable conduct, and put in place a structured mechanism to address customer complaints.

Recovery agents can no longer function as an informal arm of the banking system. Banks must ensure that employees or recovery agents engaged in loan collection follow these guidelines:

Permissible hours of contact: Contact or visits to the borrower or guarantor should be made only between 8 am and 7 pm. If the borrower requests that calls or visits be avoided at a particular time, such requests should generally be respected.

Respect for borrower’s privacy: The employee or recovery agent should interact only with the borrower or the guarantor. They must not approach or contact other relatives or acquaintances of the borrower.

Place of contact: The borrower should be contacted at a location of their choice. If no preference is specified, contact should ordinarily be made at the borrower’s residence. If the borrower is unavailable there, then contact may be made at their place of business or work.

Avoiding inappropriate occasions: Recovery calls or visits must not be made during sensitive or inappropriate occasions, such as a bereavement in the family, natural calamities, marriage functions, festivals, or similar events.

Collection of microfinance loans: In the case of microfinance loans, repayment should be collected at a mutually agreed designated or central location. However, if the borrower fails to appear at this location on two or more consecutive occasions, field staff may visit the borrower’s residence or workplace for collection.

Manner of interaction: Employees or recovery agents must conduct themselves politely and respectfully. They are required to maintain decency and proper conduct during all interactions and visits.

Authorised representatives only: Only individuals formally authorised by the bank are permitted to visit the borrower’s premises for loan recovery purposes.

Approval for written communication: Any written communication sent by a recovery agent to the borrower or guarantor must have prior approval from the bank.

Issuance of receipt: Upon collecting loan dues, the employee or recovery agent must promptly provide a proper acknowledgement or receipt to the borrower or guarantor.

The guideline also say a bank employee or recovery agent must not adopt harsh methods while recovering dues. RBI has listed practices that shall be deemed as harsh, including the use of minatory or abusive language. Sending inappropriate messages via mobile or social media. Making excessive calls to the borrower or guarantor, including calls outside the prescribed hours.

Making threatening or anonymous calls. Intimidating or harassing the borrower or guarantor, or their relatives, referees, friends, or co-workers, whether verbally or physically, including actions intended to publicly humiliate them or intrude upon their privacy  also a big no.

Using or threatening to use violence or similar means to harm the borrower or guarantor, their family, assets, or reputation is barred. False or misleading representations, particularly regarding the extent of the debt or the consequences of non-repayment, has also been defined as threatening behaviour.

Bank will have to put in place a dedicated mechanism for redressal of recovery-related grievances. The details of this mechanism shall be provided to the borrower under the loan agreement.