Loan recovery agents, hired by regulated entities including banks, NBFCs and ARCs, cannot intimidate borrowers or call them before 8 am and after 7 pm., as per the new guidelines laid down by the Reserve Bank of India.

The RBI, while issuing additional instructions to regulated entities such as banks, non-banking financial companies (NBFCs) and asset reconstruction companies (ARCs), said it has observed that recovery agents are deviating from its instructions with regard to the recovery of loans.

“It is advised that the REs (regulated entities) shall strictly ensure that they or their agents do not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts,” ​the ​RBI said in a notification on Friday.

Recovery agents cannot send inappropriate messages to borrowers in any form. They also can’t make threatening or anonymous calls. Nor can they make false and misleading representations.

RBI has issued guidelines from time to time as part of the Fair Practices Code (FPC), and has already advised REs that they should not resort to intimidation or harassment of their borrowers, calling them on phone at odd hours in their debt collection efforts, among others

The banking regulator said it took into account certain recent developments including growing incidences of unacceptable practices followed by RAs (recovery agents) to issue these additional instructions to REs.

These additions have extended the scope of guidelines while limiting the hours for calling borrowers on phone for recovery of overdue loans.

RBI said these instructions will be applicable to all commercial banks (including regional rural banks), Cooperative Banks, Non-Banking Financial Companies (NBFCs), Asset Reconstruction Companies (ARCs) and all India financial institutions.