Loan recovery work is often outsourced to third-party agencies, but some recovery agents use rude and intimidating language. They show little sensitivity, even during weddings, family gatherings or funerals, leading to public humiliation of borrowers. Complaints about such misconduct have been rising. To address this, the Reserve Bank of India (RBI) plans to introduce new rules for banks, non-banking financial companies (NBFCs) and small finance banks. The rules stress responsible behaviour, ban mental harassment based on personal data and make call recording compulsory.
There have been tragic cases of borrowers taking their own lives due to harassment. The new regulations focus on protecting consumer rights and mental well-being. They state that privacy must be respected, and agents must avoid abusive language, harsh tactics, or contacting relatives and guarantors. However, the real test will be how strictly banks ensure that recovery agents follow these rules.
