The Reserve Bank of India has announced major reforms to loan recovery practices aimed at improving borrower protection, transparency and accountability. Under the new framework, effective October 1, 2026, banks will be allowed to appoint only those recovery agents who have completed certified training through the Indian Institute of Banking and Finance.
The RBI has directed banks to provide borrowers with complete information about the recovery agency and the specific recovery agent handling their case. Any changes to the assigned agency or agent must also be communicated promptly. The move seeks to eliminate ambiguity and ensure greater accountability in debt recovery processes.
The new guidelines place strict restrictions on borrower interactions. Bank officials and recovery agents will only be permitted to contact borrowers between 8:00 AM and 7:00 PM, unless the borrower specifically requests otherwise. Before a recovery visit, banks must inform borrowers at least one day in advance through email or SMS, while borrowers without digital access must receive a written notice at least three days before the visit.
The RBI has also strengthened consumer safeguards by prohibiting recovery visits when a borrower has an unresolved complaint pending with the bank. Financial institutions will be required to maintain records of all recovery-related communications and inform borrowers whenever calls are recorded. Additionally, banks will not be allowed to install recovery-related technology on a borrower’s personal devices or seize personal mobile phones unless the device itself was financed through a bank loan.
Key Highlights
- New RBI recovery rules effective from October 1, 2026.
- Only IIBF-certified recovery agents can be appointed.
- Borrowers must be informed about assigned recovery agents.
- Recovery calls allowed only between 8 AM and 7 PM.
- Prior notice mandatory before recovery visits.
- No recovery visits while borrower complaints remain unresolved.
- Restrictions imposed on use of personal devices for recovery purposes.
