How to Protect Yourself from Harassment by NBFCs

Non-Banking Financial Companies (NBFCs) in India play a significant role in providing credit services, but cases of customer harassment, particularly in loan recovery processes, have been reported. The Reserve Bank of India (RBI) has established clear guidelines and frameworks to protect customers from harassment by NBFCs. Here is a guide on how to protect yourself and what steps to take if you face harassment:

1. Know Your Rights as a Borrower

NBFCs are bound by several regulations laid down by the RBI to ensure ethical treatment of customers. Familiarizing yourself with these protections is key to preventing and addressing harassment:

• Fair Practices Code (FPC): All NBFCs must follow the RBI-mandated Fair Practices Code (FPC), which ensures transparency in loan disbursement and prohibits coercive or unethical recovery practices.
  • Respectful Communication: Recovery agents are not allowed to use abusive or threatening language, and they must conduct themselves professionally during all interactions with borrowers.
  • Privacy Protection: NBFCs are not allowed to share borrower details with unauthorized third parties.
  • Reasonable Recovery Hours: Recovery agents are not permitted to visit the borrower’s residence for loan recovery purposes outside of designated hours (typically between 7 a.m. and 7 p.m.).

2. Document the Harassment

• Record Evidence: If you experience harassment from an NBFC or its recovery agents, document every instance. Record calls, keep copies of emails, text messages, and note down dates and times of any inappropriate visits or behavior.
• Witnesses: If a recovery agent visits your home or office, try to have a witness present who can later corroborate your claim.

3. File a Complaint with the NBFC

Before escalating the issue, file a formal complaint with the NBFC itself:

• Contact NBFC’s Grievance Redressal Officer (GRO): Every NBFC is required to have a Grievance Redressal Officer. You can find the contact details of the GRO on the NBFC’s website. Address your complaint formally, outlining the nature of harassment and attaching evidence where possible.
• Written Complaint: Submit a written complaint to the NBFC’s branch or send an email detailing the issue, including the date, time, and nature of the harassment, as well as any supporting documents.

4. Report to the Reserve Bank of India (RBI)

If your complaint to the NBFC does not result in an adequate resolution, you can escalate the matter to the RBI:

• File a Complaint on CMS Portal: The RBI has set up the Complaint Management System (CMS) portal where customers can lodge grievances against NBFCs. You can file your complaint online through the RBI CMS portal.
  • Provide Details: When filing the complaint, include all relevant details, including your loan account number, the details of the harassment, and any communication with the NBFC.
  • Timeframe: The NBFC is required to address complaints within 30 days. If unresolved, the RBI will take action.

5. Approach the NBFC Ombudsman

If the issue remains unresolved, you can take it to the NBFC Ombudsman, an independent authority established by the RBI to handle customer grievances against NBFCs.

• Who can file a complaint? Any borrower who feels aggrieved by unfair treatment or harassment by an NBFC can file a complaint with the Ombudsman.
• How to file a complaint?
  1. Online Complaint: Submit the complaint on the NBFC Ombudsman’s portal CMS Portal.
  2. Written Complaint: You can also file a written complaint with the Ombudsman office located in your region. The contact details of the NBFC Ombudsman can be found on the RBI website.
  3. Complaint Condition: You must first attempt to resolve the matter with the NBFC before filing a complaint with the Ombudsman.

6. Seek Help from a Consumer Forum

If you continue to face harassment or feel that your issue has not been adequately addressed, you can file a complaint under the Consumer Protection Act, 2019. The Consumer Dispute Redressal Forums (CDRCs) are designed to protect customers from unfair trade practices, including harassment.

• Filing a Complaint in Consumer Court: You can approach a District Consumer Forum if the compensation claimed is below ₹1 crore. If the amount exceeds this, you may approach a State Consumer Commission or National Consumer Disputes Redressal Commission (NCDRC).
• Damages and Relief: The forum may award compensation for mental agony, loss, or damages caused by the harassment.

7. Legal Recourse

If the harassment is extreme or involves threats, you can file a police complaint or pursue legal action:

• Police Complaint: File an FIR against the recovery agents or NBFC staff involved in harassment under Section 503 (criminal intimidation) or Section 506 (punishment for criminal intimidation) of the Indian Penal Code.
• Cease and Desist Legal Notice: You can also send a cease-and-desist legal notice to the NBFC demanding that the harassment stop immediately.

8. Media and Social Media Platforms

In some cases, drawing attention to the harassment through media or social media platforms may prompt a quicker resolution from the NBFC. However, this should be done carefully and preferably after seeking legal advice.

9. RBI’s Penalty Provisions

The RBI can impose penalties on NBFCs found violating its guidelines. If NBFCs repeatedly violate fair recovery practices or fail to address harassment complaints, they can be penalized monetarily or face restrictions in their operations.

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