RBI's new loan recovery rules: what changes for borrowers from January 2027

The Reserve Bank of India issued its Responsible Business Conduct (Amendment) Directions on August 6, 2026, tightening how banks and their recovery agents can chase overdue loans. The rules take effect from January 1, 2027, giving banks a few months to comply — but the changes are worth knowing now if you’re servicing a loan or a digital lending app.

What’s changing

• Contact window: Recovery agents can call or visit borrowers only between 8 am and 7 pm, unless the borrower specifically asks for a different time.
• Advance notice: Borrowers must get at least one day’s notice before an agent’s first in-person visit.
• ID checks: Agents must carry an identity card and an authorisation letter from the bank at every visit.
• Certification: Every recovery agent must hold an IIBF (Indian Institute of Banking and Finance) certification, or an RBI-approved equivalent.
• Transparency: Banks must publish the list of their empanelled recovery agencies on their websites.
• No harassment: Abusive language, threats, excessive/repeated calls, and public shaming of defaulters are expressly barred.

The digital-lending-app angle

A provision likely to matter most for personal loan and app-based borrowers: banks must compensate ₹250 per hour (capped at the outstanding loan amount) if a lending app wrongfully locks a borrower’s phone or delays restoring access after dues are cleared — a direct response to complaints about coercive device-locking by digital lenders.

Who is accountable

RBI has made banks fully responsible for their recovery agents’ conduct — so harassment by an outsourced agency is now the bank’s compliance failure, not just the agent’s. Banks must also set up a written recovery policy and a grievance mechanism specifically for recovery-related complaints.

Why it matters for you

If you have an EMI overdue, you now have a documented set of rights: agents can’t call you at midnight, can’t show up unannounced, and can’t threaten you or your family. Keep a record of calls/visits — timestamps and agent details — since that’s what you’ll need to file a complaint with the bank or RBI’s ombudsman if the rules are breached after January 1, 2027.

Source: RBI Responsible Business Conduct (Amendment) Directions, August 6, 2026; reporting by Business Today.