The RBI has issued several regulations on the functioning of recovery agents that banks hire to collect overdue loan amounts. The primary objective behind this is to put a halt to the harassment a borrower faces due to the actions of these agents. Here are some rules and regulations that loan recovery agents must follow when performing their duties.
RBI Regulations Associated with Loan Recovery Agents
To ensure that borrowers are not harassed by the recovery agents, RBI has framed several rules. These are as follows:
- Recovery agents should not physically or verbally abuse debtors.
- RBI forbids recovery agents to intrude on the privacy of borrowers’ friends, family members and referees.
- They cannot publicly humiliate debtors and their families for the collection of loan overdue.
- Recovery agents can only make calls to the borrower between 8 am and 7 pm. However, they cannot threaten or call repeatedly from a known or anonymous number.
- Besides these, recovery agents should not send inappropriate messages to a debtor either on the phone or on any social media.
However, to stay away from the hassles of dealing with loan recovery agents, try to repay the credit on time. Wondering how to do so? There are multiple ways for this.
Ways to Ensure Timely Payments of EMIs
There are numerous ways that can help you ensure timely repayment of your loan. These include:
- Determine Your Repayment Capacity: You can use a personal loan EMI calculator to check the EMIs and accordingly decide the borrowing amount.
- Prepare a Realistic Monthly Budget: Make sure to include EMIs while framing a budget, so you do not run out of money.
- Select Appropriate Repayment Tenure: Choosing a fitting tenure prevents you from facing financial burdens so that paying your EMIs on time becomes easier.
- Create an Emergency Fund for EMIs: An emergency fund ensures that you always have sufficient money to pay your monthly instalments.
- Set Instalment Payment Reminders: You can set reminders on your mobile so that you do not miss out on the due date of paying EMIs.
- Go for Debt Consolidation Option: A debt consolidation ensures that you do not have to remember multiple dates for paying EMIs of different loans. This is because all your present loan dues get merged into one.
By paying EMIs on time, you can also reap unlimited benefits. Know them to stay motivated and repay the credit without much delay.
Advantages of Paying Monthly Instalments on Time
Some major benefits of repaying your credit on time include:
- Maintains Good Credit Score: You will notice a gradual increase in your CIBIL score on timely payment of monthly instalments.
- Ensures Good Relationship with Lenders: Paying EMI on time projects you as a responsible financial planner and helps you gain the trust of lenders.
- Refrains You from Paying Penalties: You can save yourself from paying penalties that you would have to bear in case of delay in EMI payment.
- Gives Access to Other Benefits: Timely payment of monthly instalments can unlock several attractive opportunities like loan top-ups.
- Helps in Instant Approval of Future Loan Requests: You can get instant approval for your future credit application, giving quick access to enormous funds.
It becomes the responsibility of the bank to ensure that the loan recovery agents they are hiring abide by the RBI rules. They can face legal consequences if the borrower lodges a complaint of harassment against these agents.
FAQs on Regulations Associated with Loan Recovery Agents
1. Can you avoid the involvement of the recovery agents?
Yes, you have the option to file a police complaint against the bank or recovery agents. Upon doing so, the banks will have no option but to put a halt to the unethical and unprofessional activities of these agents.
2. What are the rights of borrowers against loan recovery agents?
Borrowers have the flexibility of selecting the time when these agents can call, text or visit them. Also, the agents cannot disclose the details of the conversation to any third party unless and until the borrower allows them to do so.
3. What are the roles and responsibilities of a loan recovery agent?
The roles and responsibilities of a loan recovery agent include locating the residential address of borrowers, developing plans for collecting the overdue amount and negotiating the debt repayments between creditors and debtors.
4. When can loan recovery agents call and message defaulters?
The defaulters can receive messages from loan recovery agents on their mobile numbers or WhatsApp under special circumstances. Also, they cannot contact a debtor before 7:00 a.m. and after 8:00 p.m. and on holidays.
5. What are the responsibilities of banks when they hire a loan recovery agent?
It becomes mandatory for a bank to disclose the details of these recovery agents to borrowers. Also, they should ensure that these agents abide by the RBI regulations and do not harass the borrowers.