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Recovery agents cannot humiliate borrowers: RBI

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MUMBAI: The RBIhas tightened the guidelines to be followed by loan recovery agents acting on behalf of lenders. The new guidelines bar recovery agents from engaging in public humiliation of borrowers or calling them before 8 am or after 7 pm.
Issuing the guidelines, the central bank said that certain recent developments, including growing incidents of unacceptable practices followed by recovery agents, were the reason for the new guidelines.
In a speech in June, RBI governor Shaktikanta Das had said, “We have received complaints of customers being contacted by recovery agents at odd hours, even past midnight. There are also complaints of recovery agents using foul language. ”
The RBI has taken serious note of this and would not hesitate to take action against errant regulated entities (REs), he added.
“The RBI, as part of guidelines on Fair Practices Code, has already advised REs that they should not resort to intimidation or harassment of their borrowers or calling them on phone at odd hours in their debt collection efforts,” the RBI said. Currently, there are guidelines on permissible hours for calling borrowers on the phone for recovery purposes regarding housing finance companies and microfinance loans. “In view of concerns arising from the activities of these agents, it is advised that the REs shall strictly ensure that they or their agents do not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts,” the central bank said.
Recovery agents are barred from acts intended to humiliate publicly or intrude upon the privacy of the debtors’ family members, referees and friends. The RBI has also warned banks against recovery agents making misleading representations.

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