Loan Default? 5 Things Recovery Agents Can't Do

If you miss loan EMIs, banks have legal steps they must follow before seizing anything. Recovery agents also have strict limits. Know your rights before they knock on your door.

Here's what happened: RBI mandates a 90-day overdue period before any loan is classified as a Non-Performing Asset, giving borrowers a legal window before serious recovery action begins.. Under the SARFAESI Act, banks must serve a 60-day written notice to secured-loan borrowers before physically seizing or taking possession of mortgaged property.. RBI's Fair Practices Code strictly regulates recovery agent behaviour — prohibited actions include late-night calls, intimidation, public shaming, and contacting family or employers without consent..

What you should do: Document every recovery agent interaction — save call logs, take screenshots of messages, and record any abusive calls as evidence for a formal complaint.. File a written complaint with your bank's nodal grievance officer first; if unresolved within 30 days, escalate to RBI's Banking Ombudsman at cms.rbi.org.in at zero cost.. Check your loan agreement for the exact default and notice clause — then contact your lender immediately to negotiate a restructuring or moratorium before the 90-day NPA clock runs out..

Even after a SARFAESI seizure notice, you can pay the full dues and legally reclaim your property before auction — this redemption right is rarely communicated by lenders.

If you're dealing with recovery agents, read our recovery agent harassment guide covering your RBI rights.