RBI guidelines are in place to ensure loan recovery is handled fairly and with respect. Lenders and recovery agents are not allowed to threaten, pressure or harass you while following up on unpaid loans.

These rules also protect borrower privacy. Recovery agents cannot discuss loan details with family members, friends, neighbours or colleagues. They must carry proper identification and can contact borrowers only during permitted hours, usually between 7 AM and 7 PM. If a meeting is required, the borrower has the right to decide the place. Lenders are also required to share clear account details, explain outstanding dues and offer options such as settlement or grievance redressal wherever applicable.

To know more about this concept, read on. 

When is a Loan Categorised as NPA (Non-performing Asset)?

A non-performing asset simply means a debt, the principal and interest of which has not been paid in the last 90 days. The government has devised the following loan recovery techniques for NPAs:

  • Debarred the banks from providing additional facilities to wilful defaulters
  • Increased the jurisdiction of Debt Recovery Tribunals (DBTs) to help them focus on high-value cases
  • Fundamentally changed the borrower and lender relationship with the Insolvency and Bankruptcy Code (IBC)
  • Infusion of capital in PSBs (Public Sector Banks) to raise the coverage ratio, allowing them to make decisions on constrained accounts without affecting their profitability

Loan Recovery Process

The loan recovery process usually starts when you miss a few EMIs. The lender first contacts you to inform you about the delay and give you time to pay. If the payment is still not made, you may receive a formal notice along with options like rescheduling or settlement. If the delay continues for longer, authorised recovery agents or legal steps may be used. But all actions must follow RBI guidelines.

RBI Guidelines on Loan Recovery

The RBI has set clear rules to ensure loan recovery is handled in a fair and respectful manner for both secured and unsecured loans.

  • Notice of default: If you miss repayments, the lender must first issue a formal notice. This notice clearly explains the overdue amount and the next steps before recovery begins.
  • Fair practices code: Lenders must follow the Fair Practices Code at all times. This ensures transparency, clear communication and fair treatment during the recovery process.
  • No harassment: Lenders and recovery agents are not allowed to use threats, pressure or abusive behaviour. Recovery must be done respectfully and without intimidation.
  • Regulated recovery agents: Lenders can appoint recovery agents, but these agents must follow RBI’s Code of Conduct. They must carry valid identification and act within approved guidelines.
  • Clear settlement process: Lenders should have a structured settlement or repayment resolution process. You must be informed about the available options to resolve your dues.
  • Right to take action: If you feel your rights have been violated, you can raise a complaint or take legal action. RBI guidelines support borrowers in seeking redressal.

What are the RBI guidelines for loan recovery agents?

The following are some of the norms notified by the Central Bank for the loan recovery agents:

  • The lenders need to publish details of all debt recovery agents on their official website
  • The loan recovery agents can’t resort to any intimidation in their efforts to claim the unpaid amount of the loan from borrowers
  • These agents can’t call the borrowers beyond 8 AM to 7 PM

Before applying for any form of credit, check if a lender adheres to the RBI guidelines for loan recovery. An RBI-registered bank or NBFC generally follows these norms. Hence, you can get an Instant Personal Loan of up to ₹10 lakhs on Fibe, which is an RBI-registered financial institution with an ISO 27001 certification. 

Our 100% digital process ensures quick loan disbursal within 10 minutes. Download the Fibe Personal Loan App to enjoy quick funding with a simple application process and minimal paperwork.

FAQs on the Loan Recovery Process

Can a loan recovery agent come to the home?

Yes, a debt recovery agent can visit a borrower’s home, provided that they follow these RBI guidelines for loan recovery:

  • If a recovery agent wants to meet, the borrower must decide the place of meeting
  • They can only contact the borrower between 7 AM and 7 PM and must respect their privacy 
  • They can’t come to a borrower’s home unannounced and they must carry an authorisation letter for the meeting 

How do I stop harassment from loan recovery agents?

If the debt recovery agents harass or trouble the borrowers, they can visit a local police station and file a complaint.

How do I take legal action against a recovery agent?

You can take the following legal actions if a recovery agency uses illegal or aggressive tactics to claim the unpaid amount:

  • You can file a complaint at the local police station against the agent
  • If you do not get relief, you can also approach a civil court and seek legal assistance

Source:

RBI – What is a Non-performing asset 

RBI Guidelines – Rules for Recovery Agents 

RBI Guidelines – Guidelines on the overall loan recovery process