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Big Relief for Borrowers: RBI Moves to Regulate Recovery Agents and Digital Device Restrictions
Any Time News Network | Pooja Srivastava
The Reserve Bank of India has issued revised draft Amendment Directions on the “Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents,” aiming to strengthen borrower protection and improve transparency in loan recovery practices across the financial sector.
The move follows extensive feedback received after the central bank first released the draft guidelines in February 2026. According to RBI, stakeholders suggested several modifications to key provisions, prompting the regulator to revise and reissue the draft for another round of public consultation.
One of the most discussed aspects of the revised framework relates to technology-based recovery mechanisms used by lenders. The RBI acknowledged stakeholder feedback regarding systems that can partially restrict or disable functionalities of financed digital devices such as smartphones or tablets in cases of loan default. The revised draft now attempts to balance technological recovery tools with borrower rights and responsible business conduct.
The proposed directions apply to a wide range of regulated entities including commercial banks, small finance banks, regional rural banks, co-operative banks, all India financial institutions, non-banking financial companies (NBFCs), and housing finance companies.
The RBI emphasized that recovery practices must remain ethical, transparent, and non-coercive. The regulator aims to ensure that borrowers are treated fairly while also establishing stronger accountability standards for recovery agents and lending institutions.
Stakeholders, regulated entities, and members of the public have been invited to submit comments and feedback on the revised draft directions by May 31, 2026. Suggestions can be submitted through the RBI’s “Connect 2 Regulate” platform or via email with the specified subject line.
