The Supreme Court of India called upon the Reserve Bank of India on Thursday to formulate comprehensive, legally binding operational guidelines to curb aggressive and coercive loan recovery practices deployed by non-banking financial companies and commercial vehicle financiers. The apex court expressed acute dismay over recurrent incidents where external recovery agents forcibly hijacked transport trucks and family vehicles from highways.
A bench examining consumer protection petitions declared that lending institutions cannot be permitted to outsource debt collection to strong-arm musclemen or execute extra-judicial property confiscations without adhering to formal judicial process and advance statutory notice requirements. The justices emphasized that financial defaults must be redressed through civilized legal mechanisms rather than intimidating borrowers or endangering public safety.
The court directed the central banking regulator to review its fair practices code for non-bank lenders and introduce stringent monetary penalties, including automatic cancellation of operating licenses, for institutions resorting to illegal asset repossessions. Financial institutions were cautioned that corporate management bears vicarious criminal liability for any physical abuse perpetrated by hired collection agencies.
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Sources:
https://www.livelaw.in/top-stories/livelaw-breaking-news-alerts-17-september-2026-550413