RBI’s New Loan Recovery Rules Create Big Discussion..

The Reserve Bank of India (RBI) has proposed strict new rules to prevent banks and recovery agents from harassing customers during loan recovery processes. Under the draft guidelines titled ‘Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents’, RBI aims to bring stronger protection for borrowers. Public feedback on the proposals will be collected until May 31, and the rules are expected to come into effect from October 1.

According to the proposal, banks should not lock mobile phones or disable features for unpaid personal, car, or home loans. Such actions will only be allowed if the same bank financed the purchase of the mobile device and the dues remain unpaid for more than 90 days. Even in such cases, internet access, incoming calls, emergency services, and government alerts should not be blocked. RBI also proposed strict action against abusive behaviour, threats, repeated harassment calls, and sharing customer information on social media by recovery agents.