Recovery agents can no longer use coercive methods of loan recovery. They have employ subtle techniques and do the same with a smile.

It has been mandated by banking regulator Reserve Bank of India from January 1 that a person who has not completed a certificate course in loan recovery and undergone 100 hours of training in behavioral skills from the Indian Institute of Banking and Finance (IIBF) is not eligible to be appointed as a loan recovery agent.

It has been said by top officials from the apex bank that many banks were not adhering to RBI guidelines on training and certificate course and so it had to take this step.

The attitude of recovery agents have brought quite some bad name to the banking industry. These agents were hired on performance based compensation grounds and their mode of operation has mostly been questionable. The central bank was forced to enforce this directive when loan recovery techniques of these agents reached heights and led to one customer committing suicide.

"Every agent will have to pass the exam conducted by IIBF," the RBI said in its circular.

The training process will encompass grooming both knowledge and behavioral skills of the agent. More than 70 institutes have been licensed to run this program.