RBI Tightens Norms on Recovery Agents’ Conduct

• 14 Feb 2026

Source: TH 

RBI issued draft guidelines titled Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Second Amendment Directions, 2026, regulating engagement and conduct of recovery agents by banks and other regulated entities, effective from 1st July 2026. 

• Prohibited Practices: Agents cannot use abusive language, threaten borrowers, make excessive or anonymous calls, contact outside prescribed hours, or publicly humiliate borrowers or guarantors. 
• Definition of Harsh Methods: Intimidation or harassment, whether verbal, physical, or reputational, towards borrowers, guarantors, or their relatives, friends, or co-workers will be treated as harsh recovery practices. False or misleading representations regarding the extent of debt or consequences of non-repayment are also prohibited. 
• Institutional Responsibility: All banks must establish a formal policy on recovery of loans, engagement of recovery agents, and taking possession of security. The policy must include eligibility criteria, due diligence norms, a code of conduct, specified activities, and performance evaluation standards for recovery agents. 
• Grievance Redressal: Every bank must establish a dedicated mechanism for complaints related to recovery practices.

Read more: Reserve Bank of India