The Reserve Bank of India has proposed stricter rules for banks and financial institutions that use agents to recover loans.
These draft guidelines were announced after RBI Governor Sanjay Malhotra spoke about the issue during the monetary policy review on February 6.
The central bank now wants to ensure that borrowers are treated fairly and respectfully during the recovery process.
Stricter Rules for Loan Recovery Agents
Under the new proposal, lenders will have to closely monitor the behaviour of their recovery agents.
Agents must respect borrowers’ privacy.
They should not visit or call people at inappropriate times, such as during weddings or family events.
The use of harsh methods or pressure tactics will not be allowed.
Banks will also need to set up proper systems to control and supervise recovery agents.
The aim is to protect borrowers from harassment and to safeguard the reputation of financial institutions.
The RBI has made it clear that dignity and fair treatment must be maintained throughout the recovery process.
Big Changes in Kisan Credit Card Scheme
Along with recovery norms, the RBI has also proposed updates to the Kisan Credit Card (KCC) scheme.
The goal is to expand coverage, simplify operations and better match loans with farmers’ actual needs.
To make loan timelines clearer, crop seasons will now be defined in months.
Short-duration crops will have a 12-month cycle, while long-duration crops will have an 18-month cycle.
To better support farmers growing long-duration crops, the tenure of the KCC has been extended to six years.
Loan limits under the scheme will now be aligned with the official “scale of finance” for each crop season.
This means farmers can receive credit that matches the real cost of cultivation.
Existing loans approved before the new guidelines will continue under current rules.
The revised norms will apply at the time of renewal or review.
The RBI has invited public comments on both draft guidelines until March 6.
Once finalized, these changes could significantly impact both borrowers and farmers across the country.