RBI: If you’ve taken out a loan and are currently paying EMIs, this news is crucial for you. The Reserve Bank of India (RBI) has introduced important changes to the loan recovery rules. These new regulations are designed to ensure that banks and recovery agents treat borrowers with dignity and refrain from harassment. The updated rules will take effect on January 1, 2027. Once these changes are in place, recovery agents will be prohibited from threatening or harassing customers through repeated phone calls or messages.
Timing of recovery calls is also regulated
A key feature of the new rule is that recovery agents will not be allowed to make calls before 8 a.m. or after 7 p.m. Additionally, they cannot harass the borrower’s family members or friends. The RBI has made it clear that recovery agents must not use threatening, abusive, or intimidating language. They are also barred from making repeated calls to harass anyone or causing public embarrassment.
When will remote device locking occur?
The RBI has specified that remote locking will only apply to the device for which the loan was taken out. If you have a personal loan or any other type of loan, the bank cannot remotely lock your phone or laptop. While banks have the right to recover their funds, the RBI aims to ensure that this technology is not misused to harass customers or enforce unfair recoveries.
The misuse of social media will also be strictly forbidden. Recovery agents are not allowed to defame a borrower by sharing their personal information, photos, videos, or audio recordings on social media platforms. Moreover, recovery agents cannot visit anyone’s home without prior notice. The RBI has set new guidelines for physical visits, requiring agents to inform the borrower at least one day in advance before the first visit to their home or any other location.
Typically, the borrower will meet recovery agents at a location of their choice. If they fail to provide a location or repeatedly miss appointments at the agreed-upon place, recovery agents may then visit their home or workplace.
Records of recovery-related conversations will have to be kept
Banks will now be required to record recovery conversations, including call times, numbers, and other relevant information. These records will generally be kept for at least six months. Even if the bank outsources recovery work to an external agency, the bank will still be fully responsible.
Personal data will get additional security
RBI has also tightened rules regarding borrower privacy. Recovery agents will only be provided with the information necessary to recover outstanding loans. Banks will be required to ensure that borrowers’ personal information is not misused in any way. Under the new rules, if a borrower defaults on loan EMIs, banks will be able to use technology-based recovery processes, such as remotely locking the financed smartphone, tablet, or laptop, as per the terms and conditions. (All photos: AI)