Reserve Bank of India (RBI) issues new loan recovery rules effective January 1, 2027

Key facts

• The Reserve Bank of India (RBI) issued new loan recovery directions on August 6, 2026.
• The new loan recovery rules will come into effect from January 1, 2027.
• RBI prohibited recovery agents and bank employees from using threatening or abusive language, excessive calling, and social media harassment.
• The rules prohibit recovery agents from intimidating or publicly humiliating borrowers or their relatives, referees, friends, or co-workers.
• Lenders cannot disable mobile phones, tablets, or laptops of defaulting borrowers except when the loan was financed by the lender.
• Where device disabling is permitted, lenders must take gradual measures and cannot restrict essential functions such as incoming calls, SMS, and emergency SOS features.
• The RBI rules also disallow false or misleading representations about the extent of debt or the consequences of non-repayment.