Second draft guidelines for recovery by RBI

The Reserve Bank of India (RBI) may allow banks to continue the loan recovery proceedings if the borrower persistently makes frivolous complaints.

The RBI, while releasing the second draft guidelines on recovery agents said, if a customer has filed a complaint, the bank should not forward the case to the recovery agents till it has disposed the complaint. However, in cases where the bank has appropriate proof that the borrower is making frivolous/vexatious complaints, it may continue with the recovery proceedings despite the pending complaint.

In cases where the subject matter of the borrower's dues might be sub-judice, banks should exercise utmost caution, as appropriate, in referring the matter to the recovery agents, depending on the circumstances, the RBI added.

It further said that all calls made by recovery agents to the bank's customers and vice versa would be monitored and recorded and directed banks to display the updated list of recovery agents and their details on their website. A periodical verification of past history of employees, of recovery agents, including police verification and additional conditions for asset-recoveries will also be done.

Keeping in view the fact that agents across the country need to be trained, the revised guidelines has suggested that banks tie-up with the Indian Institute of Banking and Finance (IIBF) and other institutes and conduct their own courses to ensure that all agents clear the examination conducted by IIBF within a year.

The central bank had released the first draft of the guidelines for public comments on November 30, 2007. Based on the feedback received from banks and other organisations, the guidelines have been revised suitably in the second draft.