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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.

The Reserve Bank of India (RBI) has released the draft Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Amendment Directions, 2026 for feedback. The draft amendment directions prescribe: Policy and due diligence framework mandating that banks implement a comprehensive policy on the collection and recovery of loan dues (including triggers, an escalation matrix, and compensation provisions for borrowers), and requiring thorough due diligence for the engagement of recovery agencies, ensuring that all recovery agents undergo certification by the Indian Institute of Banking and Finance (IIBF). Transparency and notification stipulating that banks must publish an up-to-date list of empanelled recovery agencies on their websites and branches, notify borrowers or guarantors with full details at least one day before a recovery agent's first in-person visit via SMS or email (or three days prior via letter), and immediately inform them of any changes or terminations involving recovery agencies. Fair treatment and conduct rules prohibiting the use of harsh recovery practices such as abusive language, intimidation, public humiliation, or contacting borrowers outside the hours of 08:00 and 19:00, while requiring banks to document and record all calls made for recovery purposes and retain these records for six months. Technology-based recovery tools establishing strict conditions for deploying technology to restrict a mobile device's functionality as a recovery tool—allowing it only for devices financed by the loan, requiring explicit contractual consent, employing a graduated approach that preserves essential functions (like internet, incoming calls, and emergency SOS), and mandating the reversal of restrictions within one hour of the default being cured, backed by a penalty of ₹250 per hour for delays. Possession of security, compliance, and grievance redressal requiring banks to ensure possession clauses are legally valid and explicitly communicated at the time of contract execution, mandating the establishment of a dedicated mechanism for the redressal of recovery-related grievances, and stipulating adherence to guidelines issued by the Telecom Regulatory Authority of India (TRAI) such as the Telecom Commercial Communications Customer Preference Regulations (TCCCPR). Feedback may be submitted via the RBI's Connect2Regulate platform by May 31, 2026.

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India's Reserve Bank Issues Revised Draft Amendment Directions on Loan Recovery Conduct

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Reserve Bank of India Seeks Feedback on Revised Draft Amendment Directions on Loan Recovery Conduct for Commercial Banks