Mumbai | The Reserve Bank on Thursday came out with draft rules governing banks' engagement of loan recovery systems, mandating training for agents and also recordings of all calls.

A bank must ensure that all phone calls made to a borrower by an agent are recorded, the RBI said, stressing that an agent interacts with a borrower in a "civil manner".

The proposed guidelines ask banks to put in place guidelines on the subject, and also ensure that customer information resting with the agents or employees is not misused.

"An employee/recovery agent shall interact with the borrower in a civil manner. Further, he / she shall maintain decency and decorum during visits to the borrower's place for collection / recovery of loan dues," the RBI said.

The RBI is also mulling to make it compulsory for the recovery agents to undergo the 'debt recovery training' conducted by the Indian Institute of Banking and Finance (IIBF).

The draft follows an announcement to this effect made by Governor Sanjay Malhotra last week while announcing the monetary policy review. In the past, there have been instances including the death of the next of kin of a borrower during a visit by a loan recovery agent in Bihar, which had prompted the RBI to ask lenders to be more sensitive.

The draft rules announced on Thursday specifically mention that the recovery efforts should desist usage of abusive language, sending inappropriate messages.

In the draft rules, the central bank also proposed that the loan recovery efforts should not be undertaken at "inappropriate occasions" such as bereavement in the family or such other calamitous occasion, or marriage functions and festivals.

A bank shall also ensure that the recovery agencies engaged by it carry out verification of the antecedents of their representatives / employees at pre-engagement level and subsequently, on an ongoing basis at a pre-defined periodicity.

In cases where the subject matter of the borrower's loan dues is subjudice, the bank shall exercise "utmost caution" in referring the matter to its employee or recovery agents, it said.