The RBI's third amendment on Responsible Business Conduct for Non-Banking Financial Companies (NBFCs) focuses on recovery agent engagement practices to promote ethical lending.
RBI Updates Responsible Business Conduct Directions for NBFCs
The Reserve Bank of India (RBI) has released the third amendment directions for Non-Banking Financial Companies (NBFCs) focusing on 'Responsible Business Conduct' on August 6, 2026. This amendment aims to refine and reinforce the guidelines governing the engagement of recovery agents.
The RBI's review of existing guidelines highlights the need for ethical recovery practices that safeguard consumer interests. As part of this amendment, NBFCs are now required to ensure that their recovery agents adhere to a strict code of conduct that promotes fairness and accountability in loan recovery.
This move is in line with the RBI's broader agenda to enhance consumer protection and ensure that lending practices remain both responsible and transparent. These guidelines are particularly relevant for NBFCs, who play a significant role in providing financial services to the underserved segments of society.
For legal advisors and practitioners within the financial services sector, these updated directions necessitate a thorough understanding of compliance requirements as they advise clients on operational practices and potential liabilities related to recovery operations.
Citations
- RBI Circular No.230 (2026)