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RBI issues guidelines for engaging recovery agents

MUMBAI: The Reserve Bank of India on Friday advised banks that they should preferably use the forum of Lok Adalats for recovery of personal loans, credit card loans or housing loans with less than Rs. 10 lakh as suggested by the Supreme Court.

“Banks, as principals, are responsible for the actions of their agents. Hence, they should ensure that their agents engaged for recovery of their dues should strictly adhere to the guidelines and instructions, including the BCSBI (Banking Codes and Standards Board of India) Code,” the RBI stated in a proposed guideline for banks engaging recovery agents. The RBI also invited views and comments from the public on this proposed guidelines within a month.

Complaints received by the RBI regarding violation of the guidelines and adoption of abusive practices followed by the banks’ recovery agents would be viewed seriously, the RBI stated.

It may also consider imposing a ban on a bank from engaging recovery agents in a particular area, either jurisdictional or functional, for a limited period.

Similar supervisory action could be attracted when the High Courts or the Supreme Court pass strictures or impose penalties against any bank or its directors or officers or agents with regard to policy, practice and procedure related to the recovery process.

Banks were advised that in the matter of recovery of loans, (a) the lenders should not resort to undue harassment, namely, persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans and the like; (b) the banks should ensure that agents engaged by them for debt collection refrain from action/s that could damage the integrity and reputation of the bank; (c) their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude into the privacy of the borrowers’ and credit card holders’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.

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