What can I do if a bank's recovery agent is harassing me over a loan default?

Question

Recovery agents from my bank's collection agency are calling me at odd hours and threatening me even though I have only defaulted for a short period. Is there a law against this? What I am unsure about is the procedure — where the application goes, what it costs, and how long recovery agent harassment matters usually take. A plain explanation of the steps, in order, would help more than a general answer.

MyVakeel Legal Desk · Accepted Answer

The law that applies to recovery agent harassment here is RBI Fair Practices Code for Lenders 2015, RBI Guidelines on Recovery Agents 2008 and Indian Penal Code 1860, Section 503 and Section 506. The detail below matters, because RBI Fair Practices Code for Lenders 2015 draws the line differently depending on what your documents show.

RBI's Fair Practices Code requires banks and their recovery agents to contact borrowers only between 8 am and 7 pm, and to avoid intimidation, humiliation, or use of muscle power for recovery of dues.

Recovery agents must carry a copy of the authorisation letter from the bank and their own identity card, and must not visit or call at a time or place other than what is agreed, unless special circumstances warrant otherwise.

Threatening calls, use of abusive language, or visits by unauthorised persons violate RBI guidelines and can be reported to the bank's grievance redressal officer and, if unresolved, escalated to the RBI Ombudsman.

Criminal threats, intimidation or use of force by recovery agents can separately attract offences under Sections 503 and 506 of the Indian Penal Code for criminal intimidation, apart from any civil liability of the bank.

Banks are vicariously responsible for the conduct of recovery agents they engage, and RBI has held banks accountable for lapses by outsourced agencies, including suspension of their empanelment.

In practice, in this order: 1) Keep a record of dates, times and content of harassing calls or visits, including recordings if possible; 2) File a written complaint with the bank's nodal grievance redressal officer citing the Fair Practices Code violation; 3) If the bank does not act within 30 days, escalate the complaint to the RBI Ombudsman under the RBI Integrated Ombudsman Scheme; 4) For threats or intimidation, file a police complaint under Sections 503/506 IPC in addition to the regulatory complaint.

Timing matters here: RBI Fair Practices Code for Lenders 2015 works on limitation periods, so a recovery agent harassment claim that is right on the merits can still fail if it is brought late. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in banking law.