RBI issues circular on ‘Outsourcing of Financial Services – Responsibilities of regulated entities employing Recovery Agents’
The Reserve Bank of India (“RBI”) has directed all the Regulated Entities (“REs”) to 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. Such acts of intimidation or harassment include the following:
- acts intended to humiliate publicly or intrude upon the privacy of the debtors’ family members, referees and friends,
- sending inappropriate messages either on mobile or through social media,
- making threatening and/or anonymous calls,
- persistently calling the borrower and/or calling the borrower before 8:00 a.m. and after 7:00 p.m. for recovery of overdue loans,
- making false and misleading representations, etc.
This is, however, not applicable to microfinance loans covered under ‘Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022’, dated March 14, 2022.
Please note that the above instruction will supplement and will be read in conjunction with the existing guidelines/directions issued by the RBI, as amended from time to time, which are provided in “Annex” of the present circular.
The RBI has reiterated that the ultimate responsibility for the outsourced activities vests with the REs and they are, therefore, responsible for the actions of their service providers including Recovery Agents.
Source: Reserve Bank of India
