RBI Issues Revised Draft Directions on Recovery of Loans and Recovery Agents
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- Last Updated on 22 May, 2026
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Press Release no. 2026-2027/298; Dated: 20.05.2026
The Reserve Bank of India (RBI) has issued revised draft amendment directions on the ‘Conduct of Regulated Entities (REs) in Recovery of Loans and Engagement of Recovery Agents’.
The draft directions seek to strengthen borrower protection, improve accountability in recovery practices and prescribe clearer norms governing engagement of recovery agencies and agents by regulated entities.
1. Norms for Engagement of Recovery Agencies
The revised draft directions prescribe requirements relating to engagement of recovery agencies for recovery of loan dues.
Regulated Entities (REs) will be required to establish appropriate policies and due diligence mechanisms while appointing recovery agencies and agents to undertake recovery-related activities.
The framework seeks to ensure greater oversight and accountability in outsourced recovery operations.
2. Code of Conduct for Recovery Agents and Employees
The draft directions lay down a code of conduct applicable to:
- Recovery agents engaged by Regulated Entities; and
- Employees of banks and other regulated entities involved in recovery activities
The proposed framework aims to ensure professional, lawful and ethical conduct during recovery proceedings.
3. Disclosure of Recovery Agency Information
RBI has proposed disclosure requirements relating to recovery agencies engaged by regulated entities.
Borrowers may be provided with relevant information concerning authorised recovery agencies or recovery personnel to improve transparency and reduce risks of unauthorised or coercive recovery practices.
4. Fair Treatment of Borrowers During Recovery Process
The draft directions emphasise fair treatment of borrowers during the recovery process.
The framework seeks to ensure that recovery measures are undertaken in a manner that is:
- Fair and transparent
- Non-coercive
- Respectful of borrower dignity and privacy
- Consistent with prescribed conduct standards
The proposals are intended to strengthen customer protection in recovery-related interactions.
5. Technology-Based Mechanisms for Recovery
The revised draft directions also cover deployment of technology-based mechanisms for recovery of loan dues.
The framework contemplates use of digital systems and technology-enabled tools to facilitate efficient recovery processes while maintaining appropriate safeguards and compliance standards.
6. Objective of the Draft Amendment Directions
The revised draft directions aim to strengthen governance, transparency and borrower protection in loan recovery practices while improving accountability of recovery agents and regulated entities.
The proposals also seek to balance efficient recovery of dues with fair treatment of borrowers and responsible deployment of technology in recovery operations.
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