Trai's number mandate for debt collection may have unintended consequences

Trai's move to shift debt collection calls to the 1600 series aims to curb fraud, but lenders warn it could force greater reliance on physical recovery methods

The Telecom Regulatory Authority of India (Trai) has directed financial services entities, including banks and non-banking financial companies, to shift to the ‘1600’ numbering series for voice calls to curb spam and fraud.

While the stated intent of the move is to protect consumers, the mandate could disrupt digital debt recovery channels, nudging lenders and their service vendors towards greater reliance on field agents to ensure collections.

 

Lenders fear that a dedicated number series is likely to deter low-intent borrowers from engaging in calls, pushing lenders towards higher-intensity collection strategies such as expanded deployment of on-ground staff, greater use of official alternate channels like WhatsApp, and a sharper focus on borrower education to keep delinquencies in check.

 

This comes at a time when multiple tech service providers have partnered with financial institutions to build technical infrastructure related to predictive analysis and machine learning, innovation in telecalling infrastructure, and investments in agentic interfaces through artificial intelligence (AI) bots.

 

The extent of quantifiable impact is yet to be seen since the deadline for compliance with Trai’s mandate for commercial banks was January 1, while for large and other non-banking financial companies (NBFCs) it is February 1 and March 1, respectively.

 

To be sure, Trai’s direction comes with a view to ‘enable citizens to reliably identify legitimate calls originating from regulated financial institutions’ at a time when scams and fraudulent calls, especially so-called digital arrests, are draining bank accounts of unsuspecting victims.

What are the unintended second-order effects of Trai’s mandate?

People with knowledge of the matter said this is likely to lead to a 30 per cent increase in lenders moving towards the physical field collection method, which could raise costs between 10 and 15 per cent, depending on the stage of collection or delinquency of a particular borrower.

 

The ability to connect with borrowers may have reduced by half among those who have implemented the mandate, people in the industry estimated.

 

“The reliance on the field network is going to significantly increase when 1600 rolls out completely. While the 1600 series is a very good thing because it is going to cut down a lot of the financial fraud that is happening today, there could be a challenge from a collections perspective since there have been advancements in digital to reduce physical touchpoints,” said Ananth Shroff, founder and chief executive officer (CEO), DPDZero, a debt collections fintech firm.

 

Trai’s move comes at a time when the number of bank frauds has shrunk. However, the value of such frauds has gone up, according to Reserve Bank of India (RBI) data.

 

The amount involved in banking system frauds surged to Rs 21,515 crore in the first half of FY26 (H1 FY26), up 30 per cent from the same period last year, even as the number of frauds fell 2.8 times to 5,092.

 

In comparison, the amount involved in banking system frauds stood at Rs 16,569 crore in H1 FY25, while the number of cases was higher at 18,386. For the full financial year, the value of frauds amounted to Rs 34,771 crore and the number of cases stood at 23,879.

 

Companies and lenders may still be going through the fine print to understand whether the mandate is applicable to collections, considering it may not necessarily qualify as part of a transaction.

 

“People are not picking up calls where bots are using the 1600 numbering series, rendering them redundant. There will be dependency on offline activities like going back to the traditional model of ground collection because you are not able to establish a connect using a telecall,” said Rishabh Goel, co-founder and CEO, Credgenics, a debt collections firm.

How are lenders using predictive tools to improve collections?

Meanwhile, tech companies have built analytical tools to ensure efficient collections at the start of the credit cycle.

 

“There is focus on predictive analysis. There is intelligence in identifying the kind of borrowers in the overall pool and understanding the persona of the borrower. This is followed by intelligence on how to engage with the borrower,” Shroff noted.

 

Goel explained that the company continues to follow both means of collections, including physical and digital, with a focus on the latter.

 

The company has partnered with payments firms like PhonePe, leveraging their larger customer base to reach out to borrowers with reminders for repayments.

 

“A lot of engagement happens through WhatsApp, with a large chunk of the population present there. Using that channel effectively with regional content so that people are able to read and resonate well, along with other methods such as educational content and performance marketing, is also being implemented,” Goel explained.