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ARTICLE · 26 JUNE 2025

What Are The Ethical Guidelines For Recovery Agents?

Samagra Law
Samagra Law
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As per the RBI guidelines, Banks and Financial Institutions (‘FI') can appoint external recovery agents to recover loans from defaulting customers.

IndiaFinance and Banking
Ajith C. R.
Ajith C. R.
Akshay Bhatia
Akshay Bhatia
Kobinath Venkataraman
Kobinath Venkataraman
Subikshaa Pradeep
Subikshaa Pradeep

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Recovery Agents and their engagement :

As per the RBI guidelines, Banks and Financial Institutions ('FI') can appoint external recovery agents to recover loans from defaulting customers. The recovery agents should be selected with utmost care, and their track record should be carefully scrutinized. They should be given proper training and guidance to ensure that they do not violate any law or misbehave with the customers. Since there exists a principal-agent relationship between the Banks/FIs and the recovery agents, the former can be held liable for the actions of recovery agents. If the recovery agents harass the customer resulting in any unfortunate incident, then the Banks/FIs may be held liable for criminal proceedings as well.

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