If an EMI Slips: What an HFC's Recovery Agents Can and Cannot Do Under RBI Rules

A Bengaluru flat owner loses a job in a restructuring and misses two EMIs on a loan from a housing finance company. A week later, the calls start. One comes at 7.45 in the evening. Another caller asks a neighbour about the family's finances. A third says someone will visit during a cousin's wedding the following weekend. The owner wants to pay and is trying to arrange money, but has no idea what the lender's agents are actually allowed to do.

RBI's current rules for housing finance companies are specific about recovery conduct. They set contact hours, require agents to carry proof of authority, bar approaching relatives, ask agents to avoid occasions such as bereavements and weddings, and say recovery or seizure can only happen through legal means. This guide sets out those rules for borrowers who fall behind. It is buyer guidance on lender conduct, not advice on avoiding repayment, and the first step in any shortfall is to talk to the lender early.

The short answer. RBI's Housing Finance Companies Directions, 2025, updated as on October 1, 2026, make the HFC responsible for its recovery agents. Agents must carry the HFC's notice, authorisation letter and identity card, contact customers between 8.00 a.m. and 7.00 p.m., act in a civil manner, deal only with the borrower or guarantor, avoid occasions such as bereavements, weddings and festivals, and have their written communication approved by the HFC. Taking possession of a mortgaged flat must follow legal means such as the SARFAESI Act. The trade-off: these rules protect your dignity and privacy, but they do not pause what you owe, so the most useful step remains an early, written conversation with the HFC about repayment.

Who is responsible for a recovery agent's behaviour?

The HFC. Paragraph 170 of the Directions says the HFC, as principal, shall be responsible for the action of its agents, and shall ensure that agents engaged for recovery strictly adhere to these guidelines and the fair practices code. Agents include agencies engaged by the HFC and the agents or employees of those agencies, and HFCs are expected to ensure their own employees follow the same guidelines.

The Directions also require a due diligence process for engaging agents, verification of the antecedents of agency staff, which may include police verification, and training on matters such as hours of calling and privacy of customer information. They say HFCs shall ensure, over a period of one year, that their recovery agents undergo training prescribed by the Indian Institute of Banking and Finance and obtain its certificate.

How can you check that an agent is genuine?

Ask for the paperwork. The Directions say the HFC shall prominently display the list of empanelled recovery agencies, with names and period of empanelment, on its website, branches, mobile applications and other platforms. When it forwards a default case to an agency, it shall inform the borrower of the agency's details.

The agent shall carry a copy of the notice and the authorisation letter from the HFC along with an identity card issued by the HFC or the agency, and the notice and letter shall include the agency's telephone numbers. If the agency changes, the HFC must notify the borrower and the new agent must carry the same documents. The HFC shall also ensure calls made by recovery agents to customers, and vice versa, are recorded with the customer's knowledge.

What conduct do the rules require during calls and visits?

Paragraph 170 lists methods all staff and authorised persons must follow. Customers would ordinarily be contacted at a place of their choice, otherwise at their residence, and if unavailable there, at their place of business. Identity and authority to represent the HFC shall be made known at the first instance. Privacy shall be respected, interaction shall be civil, and contact for recovery of overdue loans shall be between 8.00 a.m. and 7.00 p.m.

A customer's request to avoid calls at a particular time or place shall be honoured as far as possible. The time, number and content of calls shall be documented. Only employees of the recovery agency should visit the borrower's premises, with no other person accompanying them. Inappropriate occasions such as a bereavement, marriage functions or festivals shall be avoided for calls or visits. Written communication from the collection agent must have the HFC's approval, and the HFC shall interact only with the borrower, or the guarantor if required, and not approach other relatives or contacts.

The Directions also look at why agents misbehave. They note that stiff targets or high incentives may induce agents to use intimidatory and questionable methods, and say the HFC shall ensure its contracts with recovery agents do not induce uncivilised, unlawful or questionable behaviour or recovery processes. If an agent tells you they are under pressure to collect today, that is the HFC's problem to manage, not a reason for you to accept conduct the rules do not allow.

How do the rules compare with what borrowers report?

The table sets common situations against the Directions. The second column restates the rules; the last three are borrower responses.

What about your flat itself?

It can only be taken through legal process. The Directions say it has been observed by the Supreme Court that recovery of loans or seizure of assets could be done only through legal means. They note that HFCs may rely on remedies under the relevant statutes to enforce security interest without the intervention of courts, and that the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002 lay down well defined procedures for enforcing security interest and for auctioning property after enforcement.

The Directions add a point worth checking in your loan papers now, before any trouble. Where an HFC relies on a pre-possession clause in its contract with the borrower, it shall ensure the clause is legally valid, complies with the Indian Contract Act in letter and spirit, and is clearly brought to the borrower's notice at the time the contract is executed. Read your loan agreement for any such clause and ask the HFC to explain it.

If you receive a notice under that law, its timelines and remedies matter; our report on a Karnataka High Court ruling on a Hennur flat and SARFAESI remedies shows how the forum for challenging such action can be decided.

What should you do the moment an EMI slips?

Talk to the HFC first, in writing. Explain the shortfall, propose what you can pay and when, and ask what options it can offer. Check how penal charges are being applied; RBI's separate rules on penal charges, covered in our explainer on penal charges versus penal interest, apply to many lenders. If recovery contact breaks the rules above, write to the HFC's grievance channel.

RBI's conduct Directions, at paragraph 20 of the NBFC Responsible Business Conduct Directions, 2025, add that lenders shall not resort to undue harassment such as persistently bothering borrowers at odd hours or using muscle power, and that staff should be trained to deal with customers appropriately.

A seven-point checklist if you fall behind on an HFC loan

1. Write to the HFC as soon as you know an EMI will be missed, with a proposed plan.
2. Ask the HFC which recovery agency, if any, has been assigned to your case.
3. Check that agency against the HFC's displayed list of empanelled agencies.
4. Ask any visitor for the HFC notice, authorisation letter and identity card.
5. Log the date, time and content of every recovery call and visit.
6. Ask in writing for calls only between 8.00 a.m. and 7.00 p.m. and no contact with relatives.
7. Seek legal advice promptly if you receive any notice relating to the mortgaged flat.

Frequently asked questions

At what times can an HFC's recovery agent contact me?

RBI's Housing Finance Companies Directions, 2025 say representatives of an HFC shall contact customers between 8.00 a.m. and 7.00 p.m. for recovery of overdue loans, and that a customer's request to avoid calls at a particular time or place shall be honoured as far as possible.

Can a recovery agent contact my relatives or neighbours?

The Directions say the HFC shall interact only with the customer or borrower, or the guarantor only if so required, and shall not approach any other relatives or contacts of the borrower. Only employees of the recovery agency should visit your premises, and no other person should accompany them.

How do I know a recovery agent is genuine?

The Directions say the HFC shall inform the borrower of the recovery agency's details when forwarding a case, and the agent shall carry a copy of the notice and the authorisation letter from the HFC along with an identity card. The HFC must also display its empanelled recovery agencies on its website and branches.

Can an HFC take possession of my flat without following the law?

The Directions say recovery of loans or seizure of assets could be done only through legal means, and point to the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002, which lay down procedures for enforcing security interest and for auctioning property after enforcement.

Last updated 2026-11-03. PropNewz Team.