TITLE: India's Reserve Bank Issues Revised Draft Amendment Directions on Loan Recovery Conduct
BODY:
On May 20, 2026, the Reserve Bank of India (RBI) issued revised draft Amendment Directions governing the conduct of regulated entities in the recovery of loans and engagement of recovery agents. This follows an initial consultation period that closed on February 12, 2026, during which the RBI received substantial feedback from stakeholders on the original draft Amendment Directions.
The revised directions incorporate significant changes based on stakeholder feedback, particularly regarding technology-enabled recovery mechanisms. Stakeholders had submitted feedback requesting regulatory enablement for lenders to deploy technology-based mechanisms that restrict or disable certain functionalities of financed mobile devices—such as mobile phones and tablets—to recover loan dues from borrowers in cases of default. The RBI has amended the draft directions to address these concerns and other key provisions raised during the initial consultation.
The revised draft Amendment Directions apply to multiple categories of regulated entities, including commercial banks, small finance banks, local area banks, regional rural banks, urban co-operative banks, rural co-operative banks, all-India financial institutions, non-banking financial companies, and housing finance companies. Each entity category has its own corresponding amendment direction under the Responsible Business Conduct framework.
Regulated entities and members of the public are invited to submit comments and feedback on the revised draft Amendment Directions by May 31, 2026. Submissions can be made through the RBI's "Connect 2 Regulate" section on its website or by email with the subject line specifying the full name of the relevant draft Amendment Directions and regulated entity type.