The Reserve Bank of India (RBI) is implementing a new loan recovery framework designed to curb harassment of borrowers who miss EMI payments. Under these updated guidelines, which will come into effect from January 27, banks and regulated lenders must adhere to stricter protocols regarding communication methods, recovery agent conduct, and field visits.
Furthermore, the RBI has prohibited lenders from remotely disabling a borrower’s personal devices, such as mobile phones and laptops, to recover outstanding personal, car, or home loans—unless the lender specifically financed the device in question.
Key Protections Under New Rules
Fixed Calling Hour
Under the new guidelines, recovery-related communications, including phone calls and in-person visits, are restricted to a defined time frame. Banks and their representatives are permitted to contact borrowers exclusively between the hours of 8 am and 7 pm.
Any attempts to reach a borrower outside of this designated window are strictly prohibited unless the borrower has explicitly provided prior authorisation or requested contact during those times.
No Abusive Language And Avoid Contacting In Sensitive Situations
Recovery agents are mandated to exercise sensitivity and restraint, avoiding any outreach during personally difficult moments for borrowers, such as during medical emergencies, bereavement, or wedding functions. The RBI guidelines explicitly forbid the use of intimidating, abusive, or threatening language. Furthermore, agents are prohibited from making anonymous calls, engaging in persistent or repetitive contact, or resorting to public humiliation and threats directed toward a borrower’s assets, reputation, or family members.
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No Social Media Posting
The guidelines strictly prohibit the misuse of social media platforms as a tool for loan recovery. It is impermissible for agents to publish or distribute a borrower's private data, including photographs, videos, audio recordings, or personal details, with the intention of causing public shame or harassment.
Physical visits should be informed
New transparency standards have been established for physical recovery visits, requiring banks to provide borrowers with at least one day's advance notice before an agency's initial in-person visit, alongside specific details regarding the assigned agency. Generally, borrowers are to be contacted at a location they prefer; however, agents may visit a borrower’s workplace or home if the borrower has not specified a preference or has repeatedly failed to meet at their chosen location.
During any visit, agents are required to carry proper identification, an official authorisation letter, and the relevant documentation.
Banks Cannot Disable Borrower Devices
Under new rules, the RBI prohibited banks from remotely disabling personal devices like mobile phones, tablets, or laptops to recover loans if the device is not financed by the bank.
Even in permissible cases, lenders must adopt a gradual approach, avoiding immediate disablement, and cannot restrict essential functions like incoming calls, SMS, or emergency services.
Any technology used for recovery must be secure, tested, and certified by the original equipment manufacturer (OEM) or the operating system provider to prevent the use of unlicensed or unreliable software.