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RBI's New Debt Recovery Rules Cap Lender Calls, Ban Harassment
RBI's recovery framework caps lender calls to 8 AM-7 PM, bans coercive tactics, and sets a 30-day minimum before financed devices can be remotely locked.
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The Reserve Bank of India has replaced its loan recovery framework with rules that restrict when lenders can contact borrowers, ban coercive tactics, and formally regulate the remote locking of financed smartphones and laptops.
The new guidelines, effective Jan. 1, 2027, apply to banks and regulated lenders. Recovery calls and field visits are generally permitted only between 8 AM and 7 PM. Communication outside those hours requires the borrower's prior request or explicit consent.
Recovery agents are prohibited from using abusive, threatening or intimidating language. Anonymous calls, repeated harassment, public humiliation and threats involving a borrower's family, assets or reputation are strictly forbidden. Agents also cannot publish or circulate a borrower's personal information, photographs, videos or audio recordings on social media to pressure repayment.
Borrowers must receive at least one day's notice before a recovery agency's first physical visit. Banks are required to disclose the identity of the recovery agency handling the case. During visits, agents must carry a valid identity card, an authorisation letter and the relevant recovery notice. The authorisation letter must include contact details for both the recovery agency and the bank's grievance redressal officer.
Lenders remain accountable even when they outsource recovery operations. Banks must record recovery-related conversations and maintain details such as call timings and phone numbers, with records preserved for at least six months. The RBI made clear that lenders cannot escape responsibility by blaming third-party agencies. Banks must also ensure recovery agents receive proper training and review incentive structures so they do not encourage aggressive or unethical practices.
The RBI has set a specific timeline for the remote locking of financed devices. Lenders can restrict a financed smartphone, tablet or laptop only after the loan remains overdue for at least 30 days, and only if the loan was taken specifically to purchase that device. Devices financed through unrelated personal loans cannot be disabled.