Harassment by Recovery Agents – Remedies By Law

June 20, 2023, 11:37 am | Updated June 20, 2023, 6:54 pm IST
Harassment by Recovery Agents – Remedies By Law
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In India, the use of recovery agents or debt collectors by financial institutions to recover outstanding dues has become a common practice. While recovery agents play a crucial role in the debt recovery process, there have been instances where their methods have crossed the line into harassment. Harassment by recovery agents is a serious issue that can cause immense distress and anxiety for individuals. However, Indian law provides remedies to protect consumers from such misconduct and ensure fair and just debt collection practices.


What Is Recovery Agent Harassment?

When debt collection agencies employ aggressive and illegal methods to pursue unpaid debts from people, this is referred to as recovery agency harassment. It involves actions like making frequent, threatening phone calls, using foul language, harassing family members or coworkers, feigning impending legal action or arrest, or going uninvited to the debtor's home or place of business.


The Regulation and Supervision of Recovery Agents

To regulate the activities of recovery agents, the Reserve Bank of India (RBI) issued guidelines in 2007, which were later updated in 2017. These guidelines outline the code of conduct that recovery agents must adhere to while dealing with customers. The RBI guidelines emphasize the importance of fair treatment, professionalism, and respect for customer rights during the debt collection process.

  1. Agents cannot infringe upon your privacy.

    A recovery agent is not permitted to infringe upon your personal space, as per RBI regulations. In other words, the third party is not permitted to talk about the loan with your coworkers, friends, or family. You have the right to sue the recovery agent in the event that he does this.
  1. Agents must identify themselves

    When the recovery agency shows up to collect the money, you must confirm their identity. As a representative of the bank, the bank issues each agent with an official identification card. Ensure that they do not decline to reveal their identify. Call the bank or the police right away if they object.
  1. Recovery specialists must refrain from using foul language.

    Recovery specialists must adhere to a few rules. In order to collect money from the borrower on behalf of banks, for instance, recovery agents are not permitted to use harsh language. They must also treat every client with respect, even though they are trying to collect past-due amounts.
  1. Agents can't get in touch with you during odd hours

    A recovery representative may call you from 7 am to 7 pm in accordance with RBI regulations. Prior to or following 7 o'clock in the morning, they have no authority to contact you.
    If you work in shifts, you may also request a later call from the recovery person by giving them a suitable time. They cannot, however, compel consumers to speak at an inconvenient hour.


Prohibited Practices by RBI for Recovery Agents

The RBI guidelines explicitly prohibit recovery agents from engaging in any form of harassment or intimidation. Some of the practices that are strictly prohibited include:

  1. Threats and Intimidation

    Recovery agents cannot threaten or use physical force against borrowers or their family members. They should also refrain from using abusive language or behaving in a manner that could cause mental trauma.

  2. Public Shaming

    Recovery agents are not allowed to disclose the names of defaulters or publicize their debts through any medium, such as social media or public notice boards.

  3. Invasion of Privacy

    Agents cannot invade the privacy of borrowers by contacting them at inconvenient hours, revealing details about the debt to third parties, or making repeated and excessive calls.

  4. Misrepresentation

    Agents are prohibited from misrepresenting themselves or making false statements about the consequences of non-payment.


Legal Remedies Available for Harassment by Recovery Agents

If a borrower experiences harassment by a recovery agent, they have several legal remedies available to them:

  • Making a formal complaint at the police station

    The Bank and the recovery office should be the targets of your complaint. However, the magistrate can be contacted if the police do not file a complaint.
  • Injunction action

    A civil injunction action with ad-interim relief can be brought against the bank and recovery organization in the civil court. It should be able to ensure that bank representatives and debt collectors don't go to a person's house to collect the debt.
  • File a complaint to the Reserve Bank of India with your concerns

    Following some public criticism of banks and a few incidents being documented against the harassed recovery procedure, the RBI established some guidelines for the recovery agents to follow while dealing with defaulters. In this way, defaulters have the option to get in touch with the company and lodge a formal protest if they feel undercut.
  • Defamation claim

    A person may initiate a defamation suit against the bank and the recovery organization if the debt recovery is based on false information that caused the individual's CIBIL score to be low.
  • Trespass objection

    If the Bank's recovery agents unlawfully enter someone's house without that person's permission, a trespass complaint can be made against those individuals for violating their rights.
  • Extortion complaint

    If the money was forcibly recovered by the recovery agency, an extortion complaint could be made.
  • File a complaint with your bank

    Almost every bank has a complaint department. The client has the option of moving that department and contacting someone about this. Typically, the client must wait 30 days after filing a complaint before taking action or receiving a response.
  • Grievance Redressal systems

    In order to handle consumer concerns, the RBI requires banks to set up grievance redressal systems. If a borrower's complaint is not satisfactorily addressed by the bank, they may take it further by taking it to the banking ombudsman or the consumer courts.
  • The banking ombudsman

    In the unlikely event that the Bank does not resolve the problem or complaint within the allotted timeframe, the banking ombudsman can be contacted. Such a person is chosen by RBI to serve as a high authority who resolves customer complaints. A legally binding decision should be made by the Ombudsman to request a settlement between the Bank and the client. The ombudsman whose territorial jurisdiction the client's billing address is found is where the complaints involving credit cards are filed.
  • Consumer Protection Laws

    Under the Consumer Protection Act of 2019, which calls for the creation of consumer courts at the district, state, and federal levels, borrowers may seek redress. These courts have the authority to punish and compensate victims of recovery agent harassment.
  • Criminal Charges

    Borrowers who experience significant harassment that involves illegal activity may report the recovery agency to the police under the appropriate Indian Penal Code provisions, such as criminal intimidation, defamation, or harassment.



Harassment by recovery agents is a violation of consumer rights and a matter of great concern. The RBI guidelines, along with the legal remedies available under Indian law, provide a framework for protecting borrowers from such harassment. It is crucial for borrowers to be aware of their rights, raise complaints against errant recovery agents, and seek appropriate legal recourse. By enforcing strict regulations and promoting fair debt collection practices, we can ensure a more equitable and respectful process for borrowers in India. If you are facing such issues it is advisable to consult experienced banking lawyers in your relevant jurisdiction.

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Dear Sir, Remedies against harassment by Recovery Agents Written By : Kishan Dutt Kalaskar Retired Judge There are numerous cases of the oppressive and illegal conduct of recovery agents attempting to recover pending dues for the banks' benefit. In the past few years there have been many such instances, to showcase an example, an 81-year-old woman was seriously threatened by recovery agents, she got 375 threatening calls concerning her child's unpaid bank dues. After that, she moved to the police, and a case was filed against these agents. Another incident quoted as per media reports stated that a private bus was halted, and 42 travellers were held hostage for three hours by recovery agents, who needed to recover money from the travel company that owned the bus. These cases affirm that recovery agents/offices are feared in India. A recovery agent seeks clients and organizations that owe instalments to banks. Many of these recovery agents collect the banks'clientspayment dues for a charge or a percentage of the total amount owed. These agents are generally a third-party https://www.legalserviceindia.com/legal/article-4865-remedies-against-harassment-by-recovery-agents.html You may get issue a strong legal notice from my office or file a Suit for Permanent Injunction against Recovery Agents and Bankers. ICCI Bank Limited vs. Prakash Kaur case, The Supreme Court in a landmark judgement reiterated its earlier stand that banks cannot deploy musclemen for recovery of loans from defaulters thus forcing them to end their lives. "We deem it appropriate to remind the banks and other financial institutions that we live in a civilised country and are governed by the rule of law," a bench comprising Justices Tarun Chatterjee and Dalveer Bhandari said. The court while dismissing the ICICI Bank's plea refused to delete the Delhi High Court's remarks that held the bank and its musclemen responsible for abetting a youth to commit suicide by humiliating him and taking away his motorcycle financed by the largest private sector bank. It also asked the ICICI Bank to to pay Rs 25,000 as cost of this litigation to the respondents within three weeks and directed the Delhi Police to conclude the investigation against the bank expeditiously within three months, keeping in view the gravity of the allegations. The court also directed the concerned Deputy Commissioner of Police to submit the investigation report in the Delhi High Court. According to the court, complaints received by Reserve Bank regarding violation of the above guidelines and adoption of abusive practices followed by banks recovery agents would be viewed seriously. Reiterating the RBI Guidelines on Engagement of Recovery Agents, the court said, "The Reserve Bank may consider imposing a ban on a bank from engaging recovery agents in a particular area, either jurisdictional or functional, for a limited period. In case of persistent breach of above guidelines, Reserve Bank may consider extending the period of ban or the area of ban." "RBI had expressed its concern about the number of litigations filed against the banks in the recent past for engaging recovery agents who have purportedly violated the law," Justice Bhandari, writing the verdict for the bench, stated. RBI in a letter accompanying its April 24, 2008 Guidelines had stated that it might consider imposing a ban on a bank from engaging recovery agents in a particular area, either jurisdictional or functional, for a limited period. ICICI Bank had moved the apex court seeking deletion of some paragraphs in the High Court order which had said that "...the proximate cause of death of the deceased that led him to commit suicide was on account of humiliation caused by the Bank people from where loan was taken by him." "The modus-operandi employed by the banks like ICICI for realisation of their loan amount and for recovering the possession of the vehicle against which loans are given is extra legal and by no stretch of imagination they can be permitted to employ musclemen and goons for recovery of their dues even from a defaulting party," the High Court had observed. The High Court order had come on a petition filed by Shanti Devi Sharma, the deceased's mother, seeking a probe against the ICICI bank and its staff for the unlawful action, which led to the suicide of her 34-year old son Himanshu Dev Sharma. 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However, the delay in payment could just be an oversight on the borrower’s part,” said a senior banker with a private sector bank, who did not want to be named. “But when the debt becomes 90 days overdue, we initiate recovery agent visits.” This, however, depends on a bank’s policy. In case you are unable to repay on time, it’s best to tell the bank about your situation. If you have a genuine reason, the bank may be willing to work towards a solution. This also depends on the bank’s policy. “A credit card debt can be easily converted into an EMI instead of total loan outstanding amount,” said the senior banker cited above. “The bank may even restructure a loan in some cases. Of course, this also depends on your past payment record.” Handling agents Keep in mind that at times recovery agents have big targets to achieve and may also have incentives linked to the number and volume of collection. So they are a motivated lot and handling them isn’t easy. Know the rules: You, as a debtor, have certain rights. Knowing those rights will help you handle a recovery agent. Identity: You can ask the recover agents to show their identity cards issued by the bank or under the authority of the bank. Privacy: You have a right to privacy. The recovery agent cannot discuss the debt to another person. So don’t panic if he threatens to tell neighbours or co-workers about your debt. If he does so, you can file a complaint against him with the bank. Time: The recovery agent should contact you between 7am and 7pm. However, if your working hours or work shift does not permit this, you may be contacted beyond this time limit. Calls: You can choose the place and time for receiving recovery calls. You can also request them to not call you at a particular place or time. For instance, if you don’t want to receive calls at work, specify the same to the agent or the bank. Keep in mind, they will respect your request only till they feel you are not avoiding them. Decency: The recovery agent has to talk to you in a decent and civilized manner. No abusive language should be used. Also, the written communication sent by the banks should be easy to understand. Investigation: If you file a complaint against a recovery agent, the bank needs to investigate the matter. This makes recovery agents accountable for their collection practice. Inappropriate occasions: If there is a death in your family or any such event, you can tell the agent not to call you or make visits for a few days. Records: Banks document the content of conversations between customers and agents along with the time and number of calls. Banks also need to keep all copies of communications sent to customers. Disputes: If you face any dispute or differences regarding dues, seek assistance of the lender. Seeking help There could be various reasons for you not being able to pay instalments on time— medical conditions, job loss or a twin-income family becoming a single-income household. Macroeconomic factors such as high inflation or rising interest rates, too, can be the reasons. If the reason for non-payment is not temporary, it’s best is to approach credit counselling agencies and seek help. “We provide free credit counselling for those who are struggling to get out of debt,” said Narayanan Raja, chief executive, BCSBI. Debt counselling agencies such as Abhay and Disha also offer such services for free. If you are uncomfortable going to these centres, you can avail counselling over telephone which also is provided without any cost. Recourse if harassed If you think the agent is not following any of the above mentioned rules, you should file a complaint. 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When a borrower fails to repay the money to the Bank, what the Bank can do for recovering the loan is to file a civil suit earlier. in India the remedy available to lenders has been to file an ordinary money suit for recovery against the defaulting borrower for the outstanding amounts or to file a summary suit as provided for under Order 37 of Code of Civil Procedure 1908 RBI CIRCULARS LINK - Recovery Agents engaged by Banks https://www.rbi.org.in/CommonPerson/english/scripts/Notification.aspx?Id=347 Complaints against the bank / its recovery agents 3. Banks, as principals, are responsible for the actions of their agents. Hence, they should ensure that their agents engaged for recovery of their dues should strictly adhere to the above guidelines and instructions, including the BCSBI Code, while engaged in the process of recovery of dues. 4. 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