RBI Proposes Strict Rules for Loan Recovery Agents: Civil Conduct Mandated

• RBI issues draft amendment directions on loan recovery conduct and engagement of recovery agents, inviting public comments by March 6, 2026.
• New proposals aim for a single, comprehensive set of rules covering fair treatment of borrowers, staff behavior, due diligence, and a uniform code of conduct.
• Banks must establish policies for loan recovery, agent engagement, and security possession, ensuring agents are IIBF certified.
• Mandates civil interaction, decency, and decorum from recovery agents, respecting borrower privacy and avoiding inappropriate contact hours.
• Banks are responsible for limited disclosure of borrower information to agents and must resolve grievances before forwarding cases for recovery.