The RBI asked banks, non-banking financial institutions, and other regulated entities to make sure that they and their loan recovery agents don't harass people.
A RBI circular said that recovery agents are deviating from instructions for outsourcing financial services. It asked regulated entities to make sure that borrowers do not receive phone calls after 8.00 am and after 7.00 pm. It warned against making false and misleading representations to borrowers.
The laws and regulations must not allow companies or agents to use intimidation or harassment of any kind, verbal or physical, against anyone in their debt collection efforts, including acts intended to humiliate or intrude on the privacy of the debtors' family, referees and friends, sending inappropriate messages on mobile or through social media, making threatening and anonymous calls. The RBI circular said that any violation will be viewed seriously, and applies to all commercial, regional and rural banks, small banks, and non-banking financial companies, including housing companies. Payments are not included in the program.
All-Indian financial institutions including Exim Bank, the National Bank for Agriculture and Rural Development, the National Housing Bank, the Small Industries Development Bank of India and the National Bank for Financing Infrastructure and Development also fall under the purview of the circular.
All primary urban cooperative banks, state cooperative and district central cooperative and district central cooperative and asset reconstruction companies must abide by the RBI circular.
The banking regulator said that the circular does not apply to microfinance loans covered under the RBI's master directions on the regulatory framework for microfinance loans.
The circular said that regulated entities should be advised that they have the ultimate responsibility for their outsourced activities and are responsible for the actions of their service providers, including Recovery Agents.