The RBI has proposed new draft directions to regulate loan recovery practices, prohibiting coercive measures and enhancing borrower protections. Feedback is invited from stakeholders for refinement.
RBI Revises Loan Recovery Practices for Banks and NBFCs
The Reserve Bank of India has issued revised draft directions to improve the loan recovery practices of banks, NBFCs, and other regulated entities. The new guidelines prohibit the use of coercive measures during recovery processes, emphasizing the importance of borrower protection and ethical recovery practices.
Additionally, the draft framework introduces greater transparency and effective grievance redressal mechanisms for borrowers. These enhancements aim to foster trust between financial institutions and their customers, ensuring that recovery processes are conducted fairly and transparently.
The RBI has invited comments from stakeholders regarding the proposed changes, indicating a commitment to incorporating industry feedback before finalizing the regulations. Legal practitioners and compliance officers should actively participate in this discourse to influence the development of borrower-friendly recovery practices.
Citations
- RBI Draft Directions on Loan Recovery (2026)
