RBI’s New Loan Recovery Rules: The Reserve Bank of India has put more pressure on banks and NBFCs to keep recovery work clean and fair. In the new 2026 framework, loan recovery agents are not supposed to harass borrowers, use ugly language, or make life hard for them. A recent report said the rules are meant to stop “coercive practices, intimidation, abusive calls and public humiliation.” It also said the revised framework will start on 1 October 2026. The same report noted that the new system will make banks and NBFCs more responsible for both outsourced agents and in-house recovery staff.
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The RBI already had older rules on recovery conduct too. Its earlier directions said banks must keep a tape recording of recovery calls and must not forward a case to recovery agents while a borrower’s complaint is still unresolved, unless the bank has proof that the complaint is only being used to delay payment. The RBI also told banks to give recovery agents proper notice and authorization papers.
What Recovery Agents Can and Cannot Do
The basic time rule is simple. Recovery agents may contact borrowers only between 8 AM and 7 PM unless the borrower clearly allows another time. The report also says they cannot use threats, abuse, repeated disturbing calls, or social media shame. They are also not allowed to trouble family members, neighbours, friends, office colleagues, or other linked people unless those people are loan guarantors. Even then, the report says they must still be treated with respect.
The new framework also talks about calls and visits. Recovery-related calls must be recorded and kept for at least six months, and borrowers must be told that the call is being recorded. When agents visit, they must carry identity cards, authorization letters, and copies of the bank notice. Banks must also tell borrowers about recovery visits by SMS, email, or written notice within the RBI’s timeline.
There is also a new rule for financed mobile devices. A lender cannot remotely disable a borrower’s phone unless the phone was bought under the loan agreement and the borrower has stayed overdue for 90 days after proper notice. Even then, the lender cannot block internet access, incoming calls, emergency SOS, or government emergency alerts. The report said borrowers may get ₹250 per hour if a device is wrongly blocked.
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What Borrowers can do if they Face Harassment?
Loan default is generally treated as a civil matter, so recovery agents cannot threaten arrest or use dirty pressure tricks without proper legal process. If a borrower faces threats, rough behaviour, or unlawful recovery steps, the report says the person can complain to the lender’s grievance redressal officer, then go to the RBI Ombudsman if the issue stays unresolved, or even approach the police in serious cases.
The RBI’s older fair practice rules also say lenders should keep strong grievance systems and protect customer dignity. They also note that in sensitive areas, banks should preferably use employees rather than outside recovery agents.
