How loan recovery agent harassment tactics works?

The purpose of this article is to help you understand how loan recovery agent harassment works! It describes the adaptation of harassment by recovery agents to collect payments owed by debtors and how to handle such harassment.

Recovery agents are the people hired by a bank or other financial institution in order to collect the unpaid installments or payments due for a charge owed by the clients to the bank or financial institution. These recovery agents are not the actual party to the bank (that is between the financial institution and the client). They are the third party to the contact.

In recent years, there have been many cases about the about the loan recovery agent harassment done to borrowers. This has resulted in them committing suicide because of the uncertain humiliation faced in front of their friends & families. Debtors not only receive threat calls from these agents, but also face actual loss.

Loan recovery agent harassment

Recovery agents have for a long time been known to threaten and torture borrowers who owe money to their bank or financial institution.

In the wake of the COVID 19 crisis and the vast number of people borrowing money, there are a large number of cases where recovery agents have used coercive and oppressive tactics to collect payment dues.

 What is not considered loan recovery agent harassment?

  • Any of the following things that are illegally done by the loan recovery agent is harassment.
  • Recovery agents attempt to approach the borrower multiple times in a day which is illegal.
  • They use your neighbors, relatives, families, friends, colleagues, and coworkers to defame the borrower for taking out the loan.
  • Defaming and humiliating the borrower in front of the public.
  • In addition, they use fake official identities to give the impression that they are official, but the reality is that they are not.
  • When the borrower fails to answer their calls, they harass the borrower’s contact and constantly disturb them.
  • Constantly pressuring and threatening borrowers.

Even so, not all tactics used by the lender are considered harassment, as they are entitled in some way to recover the amount from the borrower. The recovery agent won’t be considered harassing if he sends prior updates and demands or calls at the customer’s home at a reasonable time, or initiates court action. The creditor can adopt these measures to recover the debt from the borrower.

Guidelines for the protection of borrowers from the recovery agents

 According to the Banking Codes and Standards Board of India (BCSBI), a fair practice code has been laid down, which is an independent watchdog of the banking industry to protect the interests of Indian consumers.

As per their guidelines, a recovery agent cannot visit them without informing them about the meeting. A recovery agent is expected to interact with the borrower in a very civil manner and with respect, maintaining their privacy.

A letter of authorization from the bank must be carried by the recovery agent for the meeting. In addition to this, the recovery agent is strictly not allowed to contact the borrower between 7 PM to 7 AM.

In case the borrower is not able to be reached, the recovery agent can contact the borrower’s friends, relatives or neighbors. The borrower is responsible for maintaining the lender’s contact information. As per the BCSBI’s Code of Customer Rights, lenders should inform the borrower before beginning the recovery proceedings. In addition, the banks are also supposed to provide the name of the recovery agent to the borrower who has been hired to handle the case.

The Reserve Bank of India (RBI) has also laid down certain guidelines to define what can and cannot be done by recovery agents and these guidelines should be compulsory followed by all banks and financial institutions. As per this, if any grievance has been raised by a customer, recovery cases cannot be forwarded by the bank to a recovery agency till the time the grievance is settled.

Aggressive tactics are not supposed to be used by recovery agents. For any irregularities committed by the recovery agents, the banks will be held responsible. Thus, it is the duty of banks and non-banking financial institutions to ensure that their agents don’t violate the RBI guidelines.

Their guidelines require recovery agents to record every conversation with debtors or borrowers. This will enable them to be used for investigation by the financial institution in case a customer makes a complaint of harassment or threatening calls by recovery agents.

Although several norms have been laid down by RBI to deter banks from delegating the recovery process to recovery agents, these agents are still hired by banks. 


The banking system and corporate business play a crucial role in the development of the economy. If the borrowed amount is not recovered in the specific period of time, it reduces the capacity of banks to lend and therefore, hinders the reuse of assets.

The three primary functions of a bank or any corporate business include the mobilization of available resources, their arrangement, and the re-utilization of resources.

Thus, if the borrowed amount is not recovered, it hinders all these areas of function. Even honest borrowers have to suffer because of this as it also hinders the capacity of the bank to restore advances to financial institutions. The timely recovery of credit is essential for the proper functioning of a corporate business. 

If you or someone you know has been a victim of illegal loan apps, there are solutions for you. SingleDebt can help cease harassment from these agents and handle the legal side for you. We urge you not to resolve this alone as this can lead to further harassment. Contact SingleDebt on +91 961 910 3594 or fill out the form either on the home page or contact page.

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