The Reserve Bank of India (RBI) has issued draft Amendment Directions to strengthen norms governing the conduct of regulated entities in loan recovery and engagement of recovery agents. Previously, detailed instructions applied mainly to Scheduled Commercial Banks (excluding RRBs) and Housing Finance Companies. Following a regulatory review and the February 6, 2026 Statement on Developmental and Regulatory Policies, RBI has proposed comprehensive, harmonised conduct-related guidelines applicable to all regulated entities, including banks, NBFCs, cooperative banks, financial institutions, and housing finance companies. The draft amendments cover fair treatment of borrowers during recovery, behaviour of lender employees and recovery agents, due diligence, mandatory training, and a formal code of conduct framework. The proposed changes aim to standardise responsible business conduct across the financial sector. RBI has invited public comments and stakeholder feedback until March 6, 2026, through the “Connect 2 Regulate” portal or via email, before finalising the revised regulatory framework.
Reserve Bank of India
RBI Issues Draft Amendment Directions for ‘Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents’
Detailed instructions on matters related to engagement of recovery agents have been issued to Scheduled Commercial Banks (excluding Regional Rural Banks) and Housing Finance Companies currently. Upon a review, it has been decided to issue comprehensive instructions to all regulated entities on conduct related matters in recovery of loans and engagement of recovery agents, which inter alia cover aspects such as fair treatment to borrowers during recovery process, conduct of lender’s employees and recovery agents, due diligence, training, code of conduct for recovery agents, etc.
2. Accordingly, in pursuance of the announcement made in the Statement on Developmental and Regulatory Policies dated February 6, 2026, the Reserve Bank of India (RBI) has today issued the following draft Amendment Directions for public comments, which propose to amend existing Directions issued by the Department of Regulation, RBI.
- Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Second Amendment Directions, 2026
- Reserve Bank of India (Small Finance Banks – Responsible Business Conduct) Second Amendment Directions, 2026
- Reserve Bank of India (Local Area Banks – Responsible Business Conduct) Second Amendment Directions, 2026
- Reserve Bank of India (Regional Rural Banks – Responsible Business Conduct) Second Amendment Directions, 2026
- Reserve Bank of India (Urban Co-operative Banks – Responsible Business Conduct) Second Amendment Directions, 2026
- Reserve Bank of India (Rural Co-operative Banks – Responsible Business Conduct) Second Amendment Directions, 2026
- Reserve Bank of India (All India Financial Institutions – Responsible Business Conduct) Second Amendment Directions, 2026
- Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Second Amendment Directions, 2026
- Reserve Bank of India (Housing Finance Companies) Second Amendment Directions, 2026
3. The comments / feedback on the draft Amendment Directions may be submitted by the regulated entities and members of public / other stakeholders on or before March 6, 2026 through the following channels:
i. the ‘Connect 2 Regulate’ section on the website by following the corresponding hyperlink provided against each document in the page where they are hosted; or
ii. by email with the subject line ‘Feedback on (full name of the draft Amendment Directions (including the type of Regulated Entity))’.
(Brij Raj)
Chief General Manager
Press Release: 2025-2026/2099
