Getting loan is not easy as financial institutions are at risk due to rising defaulter cases and tougher has become the repayment due to increasing interest rates. And it’s a very common scenario that borrower faces financial up-down in their life because of which there is a delay in loan repayment. This also impacts credit score. And sometimes conditions worsens and it becomes nearly difficult for repay the loan and person goes totally bankrupt. The most common reasons due to which such conditions arises are job loss, medical emergencies, personal problems and many others.

Defaulting payment is an offence. Although borrowers are given time extension to repay the loan, but if loan repayment is not done even after the extended period then person has to face lot of troubles. And in such cases, banks take help of recovery agents and their main responsibility is to get the money from the borrower.

Listed below are the rules and regulations set by Reserve Bank of India in favor of borrowers:

1. Recovery agents do not have rights to harm borrowers physically. If such cases are identified then banks will be be held at fault
2. Recovery agents cannot call at improper timing
3. Mental harassment to customers will land bank in trouble

Indian bank association (IBA) has set up a code called as model code which is used during any financial transactions done with the customers. The above three rules set by RBI are mentioned in this code. Another bank association Banking code and standard bank of India has also implemented these rules and have strictly asked banks to do a thorough back ground check of the recovery agent and abide by these rules.

However, banks too have full rights to recover money from the borrowers and banks too have created rules in favor of the banks. After all, the money ultimately belongs to the bank.

Therefore it is advised that, if you are facing problem in loan repayment due to financial trouble then inform the same to the bank. They will discuss your problem and suggest solutions for loan repayment. However even after this discussion, recovery agents harass you, then you can visit bank and file a complaint. Banks have to respond to the complaint within 30 days post which you can approach banking ombudsman.

In case loan repayment is not done, banks will send you notification which also involves certain conditions. For e.g. in case of home loan, banks can take action after 3-4 months, for car loan this period is of 1 month whereas for personal loan in less than 1 month.