Regulatory Alerts2026-08-06
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Reserve Bank of India (Local Area Banks - Responsible Business Conduct) Fourth Amendment Directions, 2026
These Directions amend the Reserve Bank of India (Local Area Banks - Responsible Business Conduct) Directions, 2025, by inserting new definitions for recovery agencies and agents and replacing paragraphs 227 to 235 with a comprehensive framework for loan recovery conduct. Local Area Banks are required to establish policies covering recovery triggers, due diligence, training, and codes of conduct, while ensuring recovery agents hold IIBF certification and that call recordings are preserved for six months. The rules prohibit harsh recovery practices, restrict technology-based device locking to financed devices with specific delay thresholds, and mandate compensation of ₹250 per hour for wrongful restrictions. These Directions come into effect on January 1, 2027.
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