The Reserve Bank of India has introduced fourth amendment directions for Small Finance Banks, focusing on responsible recovery practices.
New Recovery Guidelines for Small Finance Banks by RBI
On August 6, 2026, the Reserve Bank of India (RBI) published the fourth amendment directions designed for Small Finance Banks (SFBs), as articulated in circular DOR.MCS.REC.No.194/01-01-033/2026-27. The amendment underscores the importance of ethical engagement in the recovery process.
These instructions require SFBs to implement best practices when engaging recovery agents, thereby ensuring fair treatment for borrowers during the recovery of debts. The RBI's stringent guidelines are crafted to promote responsible lending behaviors and protect consumer rights.
Legal advisors for SFBs must proactively address compliance with these upcoming changes, revising operational policies and training programs for staff involved in recovery processes to adhere to the new mandates.
The RBI's focus on responsible business conduct reflects an ongoing commitment to fostering consumer trust and enhancing operational transparency in the financial services sector.
Citations
- Reserve Bank of India (Small Finance Banks - Responsible Business Conduct) Fourth Amendment Directions (2026)