RBI asks NBFCs not to use coercion against borrowers

The RBI has asked NBFCs to ensure that no coercive action is taken against borrowers during recovery of loans by their agents and said senior management will be responsible for breach of norms.

The norms are part of the directions issued by the RBI on ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs (Non-Banking Financial Companies)’.

As per the directions, the outsourcing of any activity by NBFC does not diminish its obligations, and those of its Board and senior management, who have the “ultimate responsibility” for the outsourced activity.