TITLE: India's Reserve Bank Issues Amendment Directions on Loan Recovery and Recovery Agent Engagement
BODY:
On August 6, 2026, the Reserve Bank of India (RBI) issued Amendment Directions on the conduct of regulated entities in recovery of loans and engagement of recovery agents. The directions follow a consultation period that began on May 20, 2026, during which the RBI sought stakeholder feedback on revised draft Amendment Directions. The RBI examined all feedback received and incorporated consequent modifications into the final Amendment Directions.
The Amendment Directions apply to all regulated entities (REs) supervised by the RBI, 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 (NBFCs), and housing finance companies. The directions establish comprehensive instructions covering fair treatment of borrowers during the recovery process, conduct standards for lender employees and recovery agents, due diligence requirements, training obligations, and codes of conduct for recovery agents. The Amendment Directions also address the conduct of REs when deploying technology-based mechanisms for recovery of loan dues in financed mobile devices belonging to borrowers.
The Amendment Directions comprise nine separate instruments: the Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Fourth Amendment Directions, 2026; the Reserve Bank of India (Small Finance Banks – Responsible Business Conduct) Fourth Amendment Directions, 2026; the Reserve Bank of India (Local Area Banks – Responsible Business Conduct) Fourth Amendment Directions, 2026; the Reserve Bank of India (Regional Rural Banks – Responsible Business Conduct) Fourth Amendment Directions, 2026; the Reserve Bank of India (Urban Co-operative Banks – Responsible Business Conduct) Fourth Amendment Directions, 2026; the Reserve Bank of India (Rural Co-operative Banks – Responsible Business Conduct) Fourth Amendment Directions, 2026; the Reserve Bank of India (All India Financial Institutions – Responsible Business Conduct) Third Amendment Directions, 2026; the Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Third Amendment Directions, 2026; and the Reserve Bank of India (Housing Finance Companies) Third Amendment Directions, 2026.
The Amendment Directions come into effect on January 1, 2027. All regulated entities must ensure compliance with the new requirements by this date.