The Reserve Bank of India (RBI) on February 12, 2026, issued draft amendment directions on the conduct of regulated entities in loan recovery and the engagement of recovery agents, inviting public comments.
The proposals aim to bring all regulated entities under a single, comprehensive set of rules covering the fair treatment of borrowers, the behaviour of lender staff and recovery agents, due diligence, training, and a uniform code of conduct for the loan recovery process.
As per the RBI circular, feedback on the draft amendment directions may be submitted by regulated entities and members of the public/other stakeholders on or before March 6, 2026, and the directions will come into effect on July 1, 2026.
A bank shall put in place a policy on the recovery of loans, the engagement of recovery agents, and the taking of possession of security.
The term ‘Recovery Agents’ in these Directions shall be read contextually to mean individuals and/or agencies engaged by the bank for recovery of loan dues from its borrowers/guarantors and the representatives/employees of such agencies, per the RBI circular.
A bank that employs the services of recovery agents shall establish a due diligence process for their engagement that conforms to the instructions issued by the central bank.
A bank shall ensure that recovery agents engaged by it have obtained the certificate from the 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, based on the instructions in these Directions, shall put in place a Code of Conduct for its recovery agents and employees engaged in loan recovery activities, in accordance with the RBI circular.
There must be fair treatment of borrowers throughout the recovery process.
A bank shall ensure that the disclosure of borrowers’ information to its recovery agents is limited to the extent required to enable them to discharge their loan recovery-related duties.
Where a grievance has been lodged by a borrower, the bank shall not forward the concerned recovery case to a recovery agent till it finally disposes of the grievance.
A bank may use written communications, telephonic reminders or visits by a bank’s representatives to the borrower’s place or residence as follow-up measures for the collection/recovery of loans.
Agents must respect the borrower’s privacy. Maintain hours of contact and avoid recovery calls/visits during inappropriate occasions.
RBI also proposes that an employee/recovery agent shall interact with the borrower in a civil manner. Further, s/he shall maintain decency and decorum during visits to the borrower’s place for the collection/recovery of loan dues.
While concluding, RBI said, a bank must also ensure that it follows all applicable instructions issued by the Reserve Bank on related issues, as well as guidelines issued from time to time by other competent authorities, including those of the Telecom Regulatory Authority of India on commercial communications, such as the Telecom Commercial Communications Customer Preference Regulations, 2018, and any subsequent amendments.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
