- Effective Date: The revised RBI loan recovery framework will come into effect from 1 January 2027, replacing the relevant earlier provisions governing recovery practices.
- No Harassment: Banks, NBFCs and their recovery agents cannot use threats, intimidation, abusive behaviour or public humiliation while recovering loans from borrowers.
- Recorded Communications: Recovery-related telephone conversations are required to be recorded, strengthening accountability and providing evidence if disputes arise regarding the conduct of recovery agents.
- Identity of Recovery Agents: Borrowers must be properly informed about the recovery agent assigned to them. Agents must be appropriately authorised so borrowers can verify that the person contacting them is acting on behalf of the lender.
- Responsible Contact: Recovery agents must contact borrowers in a professional and respectful manner. Repeated or intrusive communication and inappropriate contact with relatives, friends or other persons are restricted.
- Lender Accountability: Banks and other regulated entities remain responsible for the actions of recovery agents engaged by them. They must properly supervise agents and maintain systems for addressing borrower grievances.
- Repossession of Security: Lenders must follow prescribed and transparent procedures while taking possession of collateral, including appropriate notice and an opportunity for the borrower to repay before the secured asset is sold or auctioned.
- Objective: The revised rules seek to balance a lender’s legitimate right to recover dues with the borrower’s right to dignity, privacy and fair treatment, making loan recovery more transparent and accountable.
Question:
Q1. From which date will the RBI’s revised loan recovery framework become effective?a) 1 July 2026
b) 1 October 2026
c) 1 January 2027
d) 1 April 2027
Answer: c) RBI’s revised loan recovery framework will become effective from 1 January 2027. It strengthens borrower protection by regulating the conduct of recovery agents, prohibiting harassment, improving transparency and making regulated lenders accountable for the recovery process.
