Active Stocks
Tue Apr 23 2024 15:59:47
  1. Tata Steel share price
  2. 161.10 -0.46%
  1. Tata Motors share price
  2. 986.60 1.34%
  1. NTPC share price
  2. 346.90 1.12%
  1. Bharti Airtel share price
  2. 1,342.30 3.38%
  1. HDFC Bank share price
  2. 1,507.20 -0.34%
Business News/ Industry / Banking/  Reserve Bank tightens rules on loan recovery tactics, agents
BackBack

Reserve Bank tightens rules on loan recovery tactics, agents

The central bank said banks, non-banking financial companies, cooperative banks, housing finance and asset reconstruction companies should ensure recovery agents desist from publicly humiliating borrowers or send inappropriate messages on mobile or through social media

The agents should also avoid calling the borrower before 8:00 a.m. and after 7:00 p.m.Premium
The agents should also avoid calling the borrower before 8:00 a.m. and after 7:00 p.m.

The Reserve Bank of India on Friday tightened rules for loan recovery agents following complaints of unfair recovery practices and strong-arm tactics, and told banks to ensure the agents do not harass borrowers during collection.

“In view of concerns arising from the activities of the agents, it is advised that the REs shall strictly ensure that they or their agents do not resort to intimidation or harassment, either verbal or physical, against any person in their debt collection efforts," it said in a press note.

The central bank said banks, non-banking financial companies, cooperative banks, housing finance and asset reconstruction companies should ensure recovery agents desist from publicly humiliating borrowers or send inappropriate messages on mobile or through social media. They should also avoid calling borrowers before 8:00 a.m. and after 7:00 p.m. for recovery of overdue loans, and making false and misleading representations.

RBI has come down hard on illegal activities by digital lenders following a Chinese loan app scam. On Wednesday, the regulator came out with a regulatory framework for digital lenders.

RBI said regulated entities must ensure that loan servicing and repayments are executed directly in their bank accounts without any third party pass-through or pool account.

The disbursements need to be made in the borrower’s bank account, it added

RBI said any fee or charge payable to lending service providers should be paid directly by the regulated entity and not by the borrower. Regulated entities will also have to offer a cool-off period during which the borrowers can exit digital loans by paying the principal amount and the proportionate costs without penalty.

In addition, regulated entities should also ensure all loan service providers engaged by them have a nodal grievance redressal officer to deal with digital lending-related complaints.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 12 Aug 2022, 11:04 PM IST
Next Story footLogo
Recommended For You
Banking Stocks
₹1,053.70.26%
₹1,512.3-0.34%
₹1,087.050.29%
₹133.1-0.23%
₹765.851.03%
Switch to the Mint app for fast and personalized news - Get App