RBI to take stringent action against harsh methods used by loan recovery agents

Loan recovery agents calling at odd hours or using foul language with customers will soon be a thing of the past. RBI Governor Shaktikanta Das Friday said the central bank will come out with stiff norms against such financial institutions soon.

"In the context of customer service, another area which is engaging the attention of the RBI is the harsh recovery methods used by certain lenders, without having adequate checks and controls over their recovery agents. We have received complaints of customers being contacted by recovery agents at odd hours, even past midnight. There are also complaints of recovery agents using foul language.

"Such kind of actions by recovery agents are unacceptable and pose a reputational risk for the financial entities themselves. We have taken serious note of such instances and will not hesitate to take stringent action in cases where regulated entities are involved. Such complaints against unregulated entities will have to be taken up with appropriate law enforcement agencies," Das said at an event in Mumbai.

The Governor said that the RBI had recently set up of a committee for review of customer service standards in the RBI Regulated Entities (REs) which would inter alia review the emerging and evolving needs of the customer service landscape, especially in the context of evolving digital financial products and their distribution, and suggest measures for strengthening the overall consumer protection framework.

The governor said the RBI also shortly put out guidelines to regulate digital lending.

“The recommendations of the RBI-working group on digital lending are in a very advanced stage of examination and the guidelines will be issued very shortly,” Das said.

Last year, the RBI had set up a working group to study issues surrounding digital lending apps and suggest regulations.