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The Reserve Bank of India (RBI) will ban hiring of loan recovery agents by banks if the banks continue to use abusive recovery practices.

RBI will impose a temporary ban on those banks which are engaging recovery agents. In such cases restraint has been passed or penalties have been imposed by High Court/Supreme Court with regard to abusive practices followed by the recovery agents.

RBI has taken up complaints regarding use of coercive practices by recovery agents with the concerned banks for appropriate action.

Instructions have already been issued by RBI to commercial banks and non-banking financial companies which clearly stipulate that their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts.

The guidelines also stipulate that the recovery agents would not humiliate publicly or intrude upon the privacy of the debtors, their family members, referees and friends, make threatening and anonymous calls or make false and misleading representation.