RBI rules require banks and NBFCs to ensure recovery agents act without harassment. Under RBI’s Fair Practices Code and its 2022 directions on outsourcing recovery, agents must not contact borrowers before 8:00 a.m. or after 7:00 p.m., must not use abusive or coercive tactics, and must respect borrower privacy and dignity. Borrowers facing violations can complain to the lender, then to RBI via the Integrated Ombudsman.
RBI Fair Practices Code (for Banks / NBFCs)
Recovery of loansRequires recovery without harassment and makes the lender accountable for its agents’ conduct.
RBI Outsourcing of Financial Services — Recovery Agents Directions, 2022
Notification dated 12 August 2022Recovery agents must not contact borrowers before 8:00 a.m. or after 7:00 p.m. and must avoid harassment.
RBI Guidelines on Digital Lending, 2022
Conduct & disclosure normsAdditional borrower-protection and recovery-conduct standards for digital loans.
Reserve Bank – Integrated Ombudsman Scheme, 2021
Grievance redressRoute for borrowers to escalate unresolved complaints against a lender/its agents to RBI.
The RBI holds the regulated lender (bank or NBFC) responsible for the conduct of any recovery agent it engages. Under RBI’s Fair Practices Code and its guidelines on engaging recovery agents, lenders must have a due-diligence process for agents, must inform the borrower of the agent’s details, and must ensure recovery is carried out without harassment, intimidation or breach of privacy. The lender cannot escape liability by outsourcing collection.
RBI’s August 2022 directions on outsourcing of financial services (responsibilities of regulated entities employing recovery agents) direct that agents must not contact borrowers before 8:00 a.m. or after 7:00 p.m. Agents are also expected to avoid contacting borrowers at inappropriate times or places, making persistent or threatening calls, or contacting the borrower’s relatives, friends or employer to shame them. Communication should be civil and limited to what is reasonably necessary.
Harassment — whether physical intimidation, abusive language, publicly shaming the borrower, or threats — is prohibited. Agents cannot resort to force to repossess assets and cannot misrepresent the amount due or the legal consequences of default. For digital loans, RBI’s Digital Lending Guidelines add further conduct and disclosure obligations. These are conduct standards; the underlying debt remains legally payable and lawful recovery through proper channels is permitted.
A borrower should first raise the grievance with the lender’s nodal grievance-redressal officer. If it is not resolved within the prescribed period (generally 30 days) or the response is unsatisfactory, the borrower can escalate to the RBI under the Reserve Bank – Integrated Ombudsman Scheme, 2021. Where there is criminal conduct such as threats or assault, a police complaint under the general criminal law is also available. Keeping records of calls and messages helps substantiate a complaint.
No. RBI’s 2022 directions require that recovery agents do not contact borrowers before 8:00 a.m. or after 7:00 p.m.
Contact must be civil and within permitted hours, and agents must not harass, intimidate or publicly shame you or contact your relatives, friends or employer to pressure you. Harassment is prohibited under RBI’s Fair Practices Code.
Complain first to the lender’s grievance officer; if unresolved within about 30 days, escalate to RBI under the Integrated Ombudsman Scheme, 2021. For threats or assault, you can also file a police complaint.
No. The rules govern how recovery is conducted. The debt remains legally payable, but the lender can be held accountable for its agent’s misconduct.
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