The banking regulator Reserve Bank of India has released new norms to keep a check on exorbitant interest rates charged by digital lending platforms as well as unethical practices resorted by such loan recovery companies or agents.
In one such norm, RBI has highlighted that digital lending companies will have to submit the names of the empanelled agents authorised to call or contact borrowers in cases of loan default for recovery of such loans, to customers.
This is done to curb unethical practices while recovering loans.
RBI added in a press release while announcing the regulatory stance that any fees or charges payable to Lending Service Providers (LSPs) in the credit intermediation process shall be paid directly by regulated entities (REs) and not by the borrower.
One of the frequently asked questions (FAQs) posted by RBI on the ‘Digital Lending Guidelines’ this week noted that while sanctioning a loan, the borrower would be conveyed the name of empanelled agents authorised to contact the borrower in case of loan default.
“However, if the loan turns delinquent and the recovery agent has been assigned to the borrower, the particulars of such recovery agent must be communicated to the borrower through email/SMS before the recovery agent contacts the borrower for recovery,” RBI’s note added.
In the Modern BFSI Summit 2022, Reserve Bank of India (RBI) Governor Shaktikanta Das disapproved of the harsh behaviour of loan recovery agents of banks with customers/borrowers and made clear that the central bank would not stand in favour of it.
Using harsh methods like calling loan defaulters regularly and using rough language to get the money back by bank agents, among other things, shall not be entertained by the RBI, Das clarified.
While it is mandatory for loan borrowers to return the amount and the banks have a right to get the money back, Das pointed out that such defaulters shouldn’t be ‘troubled’ by bank agents via unconventional ways.
