The Reserve Bank of India on Friday barred banks from resorting to any verbal or physical harassment of customers through agents in case of loan defaults and warned that the Central banking authority may consider ban on banks in case of any violation of the rules.

Issuing a set of draft guidelines for banks on the use of recovery agents, the RBI said banks will have to inform borrowers the details of agents being used to pursue any default cases.

The Central bank also said that recovery agents will have to call borrowers from telephone numbers notified to them and such agents need to undergo a minimum of 100 hours of training before joining such a job.

The RBI requested bankers' bodies like the Indian Banks Association or IBA and IIBF to start a certificate course for recovery agents in order to train them properly before using them against loan defaulters.

The banks have also been told to clearly incorporate repossession clauses in loan contracts and while exercising such rights, the banks will have to give a notice period to the customer before going in for repossession of an asset.

The banks have also been told to notify its customers about the procedures to be followed for the sale or auction of any repossessed property. The Central bank advised banking institutions to use lok adalats for cases relating to recovery of consumer loans bellow Rs 10 lakhs in order to ensure speedy disposal of such matters.