Concerned over growing litigations against banks and highhandedness of recovery agents, Reserve Bank of India, on Tuesday, issued strong warning to check such practices which posed serious reputational risk to banking sector.

“I am hopeful our threat would work,” RBI Governor Y V Reddy said.

An urgent need has risen to review the “policy, practice procedure” involved in the engagement of recovery agents by banks in India, Mr Reddy said adding, banks are urged to follow prescribed specific considerations while engaging them.

The RBI’s directive to bank follow a series of complaints received by RBI regarding abusive practices followed by recovery agents. Mr Reddy said an operational circular in this regard will be issued by November 15.