RBI issues revised guidelines on recovery agents

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Mumbai, Apr 24 (UNI) Reserve Bank of India today urged banks not to include adoption of uncivilised, unlawful and questionable behaviour or recovery process in its contracts with recovery agents and warned that it may even ban recovery agents for a limited period in case of violations.

In fresh guidelines issued here on recovery agents, the central bank said, some banks set very stiff recovery targets or offer high incentives to recovery agents which induce the recovery agents to use intimidatory and questionable methods for recovery of dues.

RBI said, complaints received by Reserve Bank regarding violation of the above guidelines and adoption of abusive practices followed by banks' recovery agents would be viewed seriously. It might consider imposing a ban on a bank from engaging recovery agents in a particular area, either jurisdictional or functional, for a limited period.

In case of persistent breach of guidelines, it might consider extending the period or the area of ban. Similar supervisory action could be attracted when the High Courts or the Supreme Court pass strictures or impose penalties against any bank or its Directors, Officers or agents with regard to policy, practice and procedure related to the recovery process.

The final guidelines were released after the Apex Bank had received opinion on it's draft guidelines issued after the mid-term review of Annual Policy for year 2007-08. In the mid-term review, RBI had felt need for revising the policy, practice and procedure involved in engaging recovery agents by banks in India in view of rise in number of disputes and litigations against banks for engaging recovery agents in recent past and the adverse impact it would have on the banking system as a whole.


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