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Under the new rules, lenders and recovery agents will generally be permitted to contact borrowers only between 8 am and 7 pm.
The framework prohibits the use of threatening, abusive or intimidating language during recovery efforts.
The Reserve Bank of India (RBI) has introduced a new framework governing loan recovery practices, aimed at preventing harassment of borrowers who miss EMI payments.
The revised guidelines require banks and other regulated lenders to follow stricter standards while recovering loans. The framework lays down rules on borrower communication, the conduct of recovery agents, field visits and technology-based recovery methods.
The new norms will take effect from January 1, 2027.
The RBI has also formally brought technology-driven recovery mechanisms within the regulatory framework, including the remote locking of financed smartphones, tablets and laptops.
Recovery Contact Restricted To Fixed Hours
Under the new rules, lenders and recovery agents will generally be permitted to contact borrowers only between 8 am and 7 pm.
Any communication outside this time window will be allowed only if the borrower has specifically requested or authorised such contact.
The RBI has also instructed recovery agents to avoid approaching borrowers during sensitive personal circumstances, including bereavement, medical emergencies or marriage functions.
Restrictions On Recovery Agents
The framework prohibits the use of threatening, abusive or intimidating language during recovery efforts.
Recovery agents will not be allowed to make anonymous or threatening calls, repeatedly contact borrowers, publicly shame them or issue threats relating to their family members, assets or reputation.
The RBI has also barred the misuse of social media for recovery purposes. Lenders and agents cannot share a borrower’s personal information, photographs, videos or audio recordings online with the intention of shaming them.
Advance Notice Mandatory Before Recovery Visits
The RBI’s new framework introduces additional safeguards around physical recovery visits. Before a recovery agency makes its first in-person visit, the borrower must be informed at least one day in advance. Banks will also be required to share details of the recovery agency handling the case.
Borrowers should generally be contacted at a location of their choice. However, recovery agents may visit a borrower’s residence or workplace if no preferred location has been specified or if the borrower repeatedly fails to appear at the agreed place.
The new rules also require recovery agents to carry proper identification. They must possess an identity card, an authorisation letter and the relevant notice. The authorisation letter must include contact details of both the recovery agency and the bank’s grievance officer.
Banks To Maintain Records Of Recovery Calls
The RBI has directed lenders to strengthen oversight of recovery activities by maintaining records of recovery-related communications.
Banks will be required to record recovery conversations and preserve details such as call timings and phone numbers. These records will generally have to be retained for a minimum of six months.
The central bank has clarified that lenders remain responsible for the actions of recovery agencies even when the work is outsourced. Banks must monitor recovery agents and ensure compliance with the prescribed norms.
The framework also requires lenders to adequately train recovery agents and ensure that incentive structures do not encourage aggressive recovery practices.
Stricter Privacy Safeguards For Borrowers
The new guidelines place greater emphasis on protecting borrowers’ personal information.
Recovery agents will only be allowed access to information necessary for recovering dues. Banks have been instructed to establish safeguards to prevent misuse of customer data.
RBI Lays Down Rules For Remote Device Locking
The framework also regulates the remote restriction of financed smartphones, tablets and laptops.
According to the RBI, such restrictions can be imposed only when the loan was specifically taken to purchase the device. Lenders cannot remotely disable a borrower’s existing device using a standard personal loan.
The rules also provide a grace period before any action can be taken. A device cannot be remotely restricted immediately after an EMI default. Restrictions can begin only after the loan remains overdue for at least 30 days.
A complete device restriction may be imposed only after the account remains overdue for 60 days.
Even in such cases, essential services must remain functional. Incoming calls, SMS, emergency communication and features required for work and employment cannot be blocked.
The RBI has also prohibited lenders from accessing unrelated personal data, including contacts, photographs, videos, call logs, SMS messages and location history.
Timeline Fixed For Restoring Restricted Devices
The central bank has prescribed timelines for restoring devices once borrowers clear overdue payments or regularise their loans.
In normal circumstances, access to the device should be restored within one hour of payment or settlement.
If a lender fails to restore the device within the stipulated period, the borrower may be entitled to compensation of Rs 250 for every hour of delay, subject to a limit linked to the outstanding loan amount.
The RBI has further directed lenders to clearly inform borrowers about the possibility of remote restrictions in advance rather than burying such terms within lengthy loan agreements.
August 07, 2026, 13:31 IST
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