Siddartha S. Karnani Welcomes RBI’s Shift Toward Accountability in Loan Recovery Practices
Siddartha S. Karnani has highlighted the significance of the Reserve Bank of India’s (RBI) proposed framework on responsible loan recovery, describing it as a decisive move toward structured accountability and governance in the financial sector.
Commenting on the draft directions, Siddartha stated, “The RBI’s draft directions on responsible loan recovery signal a move from broad do’s and don’ts to a much more practical, rules-based framework. Practices that were always discouraged, like coercion or public shaming, are now backed by clear processes such as recorded calls, documented contact histories, and upfront disclosure of authorised recovery agents.”
He emphasized that the draft guidelines transform loan recovery compliance from a peripheral vendor-management issue into a core governance responsibility for lenders. By mandating documented communication trails, transparency in agent authorisation, and structured oversight, the framework ensures that financial institutions remain directly accountable for the conduct of their recovery partners.
He noted that this regulatory shift is particularly relevant in an environment where digital traceability and consumer protection are becoming central to financial regulation. The proposed measures aim to curb harassment, promote fair treatment of borrowers, and enhance institutional discipline across banks and non-banking financial companies (NBFCs).
Highlighting the broader policy impact, he observed that the RBI’s approach reflects a maturing regulatory philosophy, one that balances credit enforcement with borrower dignity, while reinforcing compliance as a board-level and risk-management priority.
The draft directions are expected to significantly reshape recovery operations by embedding transparency, documentation, and accountability into the operational framework of lenders, thereby strengthening trust in India’s credit ecosystem.
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