paucity of such professionals, particularly in smaller towns.
In the draft norms on loan-recovery agents last month, the Reserve Bank of India (RBI) had proposed that such professionals should obtain a certificate from the Indian Institute of Banking and Finance (IIBF) after completing the training programme for debt recovery agents, or from any other institute having a tie-up arrangement with the IIBF.
“The availability of IIBF-certified personnel and training infrastructure remains limited, particularly in Tier-III, Tier-IV, and Tier-V cities and towns, where a considerable portion of such lending activity is concentrated,” FIDC said in its feedback on the draft proposals. The SRO argued that for low-ticket, short-tenure loans —operating on a limited-margin model—mandatory requirement to engage only IIBF-certified recovery agents may pose significant challenges to operational viability.
As an alternative, FIDC has proposed allowing lenders to engage recovery agents who have undergone comprehensive code-of-conduct training conducted by the lending institution itself, while ensuring adherence to fair practices and customer-protection standards.
A senior executive at a mid-size NBFC said the certification requirement could be difficult to implement across smaller towns.
“The intent behind standardised training is welcome, but the availability of certified personnel remains a challenge in several markets where small-ticket lending is concentrated. A flexible approach that recognises internal training programmes may help ensure compliance without disrupting operations,” the executive said.
FIDC has also urged the RBI to revise the proposal of ₹250 per hour penalty for not restoring access of mobile device after dues are cleared. The draft proposal allowed lenders to disable or restrict mobile or tablet in case of a loan default.
FIDC said there may be exceptional cases arising due to factors beyond the control of the lender, which could delay reactivation of the device. The body suggested a one-time penalty of ₹250 instead.
The NBFC SRO has also requested the RBI to reconsider the proposal requiring lenders to notify borrowers before the first recovery visit. The industry body said prior intimation could affect collection activities and may be operationally difficult to implement in certain cases, adding that recovery personnel already carry identification issued by lenders and operate under prescribed codes of conduct.
Additionally, FIDC said the 60-day period for issuance of notice, followed by 90 days for corrective action appears unduly prolonged, and could increase delinquency levels, raise collection costs, and heighten the risk of financed devices being transferred or sold to third parties — particularly given the short average tenure of such loans.
The NBFC SRO also urged the RBI to permit cross-border credit reporting for overseas borrowers, arguing that reporting defaults only to Indian credit information companies often fails to provide adequate deterrence once borrowers relocate abroad. The council has proposed allowing lenders, or authorised offshore recovery agents, to report repayment behaviour and defaults to recognised credit bureaus in host countries, subject to local laws and data privacy regulations.
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