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Who is responsible for the actions of recovery agents?

Heard of recovery agents resorting to harsh actions against borrowers for the recovery of loans? Who is responsible for the actions of recovery agents? Reserve Bank of India (RBI) has issued guidelines in this regard.

Who is responsible for outsourced recovery agents?

The ultimate responsibility for the actions of the recovery agents vests with the outsourcing regulated entities (REs).

REs need to strictly ensure that they or their agents do not resort to intimidation or harassment of any kind, verbal / physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude upon the privacy of the debtors' family members, referees and friends, sending inappropriate messages either on mobile or through social media, making threatening and / or anonymous calls, persistently calling the borrower and / or calling the borrower before 8:00 a.m. and after 7:00 p.m. for recovery of overdue loans, making false and misleading representations, etc.

Which REs are covered by the Guidelines?

The guidelines apply to the following REs –

  1. All Commercial Banks (including Local Area Banks, Regional Rural Banks, and Small Finance Banks) excluding Payments Banks
  2. All All-India Financial Institutions (viz. Exim Bank, NABARD, NHB, SIDBI, and NaBFID)
  3. All Non-Banking Financial Companies including Housing Finance Companies
  4. All Primary (Urban) Co-operative Banks, State Co-operative Banks, and District Central Co-operative Banks
  5. All Asset Reconstruction Companies


References

Reserve Bank of India. (2022, August 12). 'Outsourcing of Financial Services - Responsibilities of regulated entities employing Recovery Agents'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12378&Mode=0


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