MillenniumPost
Business

Don’t let recovery agents threaten, abuse, beat up debtors: RBI to NBFCs

The Reserve Bank on Friday proposed tough guidelines for outsourcing of work by NBFCs to ensure that their recovery agents do not resort to intimidation or harassment, either verbal or physical of borrowers. To safeguard against risks, RBI also proposed that NBFCs should not outsource core management and decision-making functions, including internal audit and KYC compliance.

Financial institutions, including NBFCs are increasingly outsourcing some of their operations as a means to access specialist expertise, not available internally, and to reduce operational costs. RBI has released the draft guidelines on ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs and sought comments by May 8. It said NBFCs should ensure that their Direct Sales Agents/Direct Marketing Agents/Recovery Agents are “properly trained to handle with care and sensitivity”, their responsibilities particularly aspects like soliciting customers, hours of calling and privacy, among others.

“The NBFC and their agents should not resort to intimidation or harassment of any kind either verbal or physical against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations,” the draft said.

Further, NBFCs should not outsource core management functions including internal audit, compliance function and decision-making functions like determining compliance with KYC norms for opening
deposit accounts. “Moreover, service providers should not be located outside India,” the draft said.

An NBFC intending to outsource any of its financial activities should put in place a comprehensive
outsourcing policy, approved by its Board, the draft added.
Next Story
Share it