The Reserve Bank of India issued comprehensive requirements governing loan collection and recovery by regional rural banks (RRBs), including the use of recovery agencies and possession of security. RRBs must establish policies covering recovery triggers, escalation, borrower financial distress, employee and agent conduct, agency oversight and compensation for losses caused by noncompliant recovery action. The rules require due diligence on recovery agencies, periodic background checks and prescribed certification for agents. RRBs must disclose engaged agencies, notify borrowers before in-person visits, record recovery calls and retain them for at least six months, and provide dedicated grievance redressal. Employees and agents generally may contact borrowers or guarantors only between 8 a.m. and 7 p.m. and are prohibited from harassment, threats, privacy intrusions, excessive communications and misleading representations. Technology-based restrictions may be used only to recover loans that financed the affected mobile device. Restrictions cannot begin before the loan is 30 days past due, with the full permitted restrictions and limits on outgoing calls allowed only after 60 days past due. Essential and employment-related functions must remain accessible, personal device data cannot be used, and restrictions must be reversed within one hour after payment. RRB-attributable wrongful restrictions or delayed reversal require compensation of INR 250 per hour, capped at the loan amount disbursed. The directions take effect Jan. 1, 2027, and existing uncertified recovery agents have one year from that date to obtain the required certification.

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