RBI has proposed that recovery agents are prohibited from calling the borrower or his guarantor before 8:00 am and after 7:00 pm for recovery of overdue EMI or late payment. Financial institutions and their recovery agents cannot call loan holders before 8 am and after 7 pm or call them to the bank’s office. Let us know about it in detail.
The Reserve Bank of India has issued strict instructions to banks and financial institutions against recovery agents who harass loan holders or borrowers of banks, their families or guarantors day and night. RBI has taken strict action against recovery agents calling for loan recovery or reaching the doorstep under physical reminder. This has brought great relief to common citizens including farmers taking loans. RBI has sought objections from financial institutions regarding its new rules proposal till November 28.
RBI has proposed strict norms for banks and their recovery agents who harass borrowers for recovery of overdue loans. According to RBI, financial institutions and their recovery agents cannot call loan holders before 8 am and after 7 pm or call them to the bank office.
The draft Master Direction on Risk Management and Code of Conduct states that regulated entities like banks and NBFCs should not outsource core management functions and financial services. Under this, decision making tasks like policy making and adherence to KYC norms and loan approval are included.
Code of conduct for sales and recovery agents will be applicableÂ
The Reserve Bank of India has said that under the proposed rules, financial institutions should ensure that the outsourcing arrangement does not impair their ability to meet their obligations to customers. The RBI draft states that financial institutions should bring in a board-approved code of conduct for direct selling agents (DSA) or direct marketing agents (DMA) or recovery agents.
Will be given training on how to behave well with customersÂ
Financial institutions should ensure that the Direct Selling Agents (DSA) or Direct Marketing Agents (DMA) or Recovery Agents are appropriately trained to handle their responsibilities with care and sensitivity. Especially requesting customers for loan EMI payment, choosing the right time to call, taking care of the confidentiality of customer information and explaining the correct terms and conditions of the product.
Recovery agents will not be able to intimidate the borrowerÂ
Financial institutions and their recovery agents shall not resort to any form of intimidation or harassment, whether verbal or physical, against any person in their loan recovery efforts. Apart from this, instructions have been given to completely stop incidents like publicly insulting the customer’s family or guarantor. Apart from this, RBI has given strict instructions to the customers not to send inappropriate messages on their mobile or through social media and not to make threatening and anonymous calls.
New rules will be implemented after review of objectionsÂ
RBI has proposed that recovery agents are prohibited from calling the borrower or his guarantor before 8:00 am and after 7:00 pm for recovery of overdue EMI or late payment. RBI has also said that financial institutions should create a management structure to monitor and control their outsourcing activities. These guidelines will be implemented after the RBI reviews the objections received on its draft till November 28.
