Circular No. 13 of 2008
November 03, 2008
Fair Debt Collection Guidelines
Bank of Pakistan in its endeavor to further streamline
the procedure of collection/recovery of debt has formulated
guidelines on debt collection to set the minimum standards
to be observed by Banks/DFIs in order to address the grievances
of customers/borrowers. These guidelines are applicable
to various types of consumer financing facilities including
Credit Cards, Housing Loans, Auto and Personal Loans etc.
In case any bank/DFI has already developed its debt collection
code of conduct, the same shall appropriately be modified
in line with these guidelines.
2. The Banks/DFIs shall follow the following minimum guidelines
in their debt collection efforts:-
i) Before proceeding for debt collection/recovery from
their customers / borrowers, the bank/DFI shall ensure
to provide him/her all information relating to payments
fallen due. A minimum of 14 days notice will be served
to the customer / borrower through letter/SMS advising
him/her to make overdue payment, before a visit to his/her
residence / business place is undertaken in a lawful
manner to negotiate recovery of the outstanding amounts.
Advance notice will be required to the customer when
bank/DFI staff picks up the payment and if it is done
on customer’s request then it should be properly
ii) Banks/ DFIs in their collection/recovery efforts
shall ensure that (a) the customers / borrowers are
not contacted at an inconvenient time (b) proper disclosure
of identity, name of the bank and the purpose of call
is provided (c) only lawful and acceptable business
language and professional attitude is adopted in establishing
iii) Banks/ DFIs shall also ensure that (a) collection
calls are properly recorded (b) customers / borrowers
are contacted at the given address/phone numbers and
in case they cannot be contacted, at alternate address/phone
number obtained through collection efforts (c) “Visit
Reports” shall be kept on record in the form of
hard copy or on electronic collection systems for at
least six months (d) collection staff shall not harass
their family members. However, necessary information
could be obtained from family/friends/third party of
the borrower if he/she is not in contact for 30 days
after the first missed payment.
iv) Banks/DFIs shall give 14 days written notice before
repossessing the leased vehicle on breach of an agreement
/ default on repayment by the customers / borrowers,
banks/DFIs and the recovery agencies employed by the
bank/DFI are advised to allow the customer/borrower
to take possession of their valuables/goods out of the
v) Banks / DFIs are advised to ensure that (a) their
collection/recovery staff do not transfer or misuse
any personal data of customers / borrowers without their
prior approval (b) any information of customer/borrower
provided to the collecting staff are properly documented.
vi) The banks/DFIs shall ensure that the collection/recovery
agencies employed by them must be enrolled with Pakistan
Banks’ Association (PBA) once the arrangements
in this regard are in place. In this regard, PBA is
being advised to develop a criteria keeping in view
the “Guidelines on Outsourcing Arrangements”
issued by State Bank of Pakistan.
In order to effectively control the functions of collection/recovery
and the human resources engaged in this process, banks/DFIs
would ensure the followings:
Frame a code of lawful conduct for recovery staff.
ii) Introduce a well defined mechanism for addressing
complaints against the collection/recovery staff.
iii) Undertake a periodical review of their recovery procedures
/ mechanism for improvement in line with law, market practice/development.
iv) Engage suitably qualified staff in collection/recovery
and provide them necessary training.
v) Regularly monitor the activities of collection/ recovery
staff / agencies.
These guidelines shall be in addition to, and not in derogation
of the relevant laws / regulations.
The State Bank of Pakistan during the course of inspection
will check compliance of above guidelines. Strict action
shall be taken against the bank/DFI for non-compliance
of above guidelines.
Please acknowledge receipt.
(Syed Irfan Ali)