Nirmala Sitharaman Urges Respectful NBFC Recoveries
Union Finance Minister Nirmala Sitharaman has called on non-banking financial companies (NBFCs) to follow respectful and fair practices while recovering loans. Speaking at a financial sector event in New Delhi, she stressed that while financial institutions have every right to recover dues, the methods must never compromise the dignity of borrowers.
She cited instances where borrowers were harassed for amounts as low as ₹500 and said such aggressive behaviour is unacceptable. “Even if it is ₹500, the approach must be professional and within the boundaries of decency,” the minister said.
RBI Code Must Be Followed
Sitharaman reminded all NBFCs to strictly adhere to the Reserve Bank of India’s Fair Practices Code, which outlines responsible conduct for loan collection. She noted that many NBFCs operate in rural and semi-urban areas and cater to financially vulnerable segments. In such cases, ensuring respectful engagement is not just ethical—it is essential for financial inclusion.
She added that institutions must understand the borrower’s condition and adopt empathetic approaches rather than resorting to coercion or humiliation. The Finance Minister also highlighted that instances of mental distress linked to recovery methods have raised serious concerns in recent months.
Partnering with Banks on Lending
Sitharaman encouraged NBFCs to explore partnerships with banks, especially in the area of priority sector lending. She pointed out that funds earmarked for agriculture, small businesses, and rural development often remain underutilised. NBFCs, with their wider outreach, can help bridge this gap effectively.
She requested the Reserve Bank of India to issue a framework that facilitates such collaborations, ensuring smoother disbursal of credit while maintaining regulatory safeguards.
Push for Ethical Lending Culture
The Finance Minister’s remarks reflect growing concern over the behaviour of recovery agents and the need for financial institutions to align their practices with India’s push for inclusive growth. Her message sends a strong signal that economic development must not come at the cost of basic human respect.
