The Telangana High Court has directed the Police to take action on a borrower's complaint alleging that a private lender company engaged recovery agents, thereby resorting to 'high handed measures' to recover a loan, in violation of RBI's 2022 circular on recovery agents.

The single judge bench of Justice E.V. Venugopal was hearing a plea filed by a borrower, seeking a mandamus against the RBI's failure to 'legitimately protect the interest of petitioner by duly enforcing its Circular dated 12/08/2022', which the petitioners alleged to have aided the private lender-Ambit Finvest- to engage recovery agents.

In the plea, the petitioner had sought for a direction to the RBI to initiate action against the lender. However, the court took note of the pending complaint before the Khammam police station.

“…on perusal of the material available on record, this Court, without making any observations on the merits or demerits of the case, deems it appropriate to direct respondent No.4[police] to take action on the representation/complaint dated 23.06.2026 submitted by the petitioners, by issuing notice to respondent No.5[lender] and enquiring upon the aspect of the compliance of the Circular instructions dated 12.08.2022 issued by respondent No.2[RBI]”, the court said.

Advocate Pullabhotla VLS Sri Chakrapani, for the petitioner, submitted that despite the RBI circular dated 12.08.2022[Outsourcing of Financial Services - Responsibilities of regulated entities employing Recovery Agents], the private lender had engaged recovery agents to recover the loan amount to the tune of Rs. 15.45 lakhs without adopting legal recourses.

Due to such alleged illegal actions, the petitioner is said to have filed a complaint on 23.06.2026 to the respondent police station for immediate action. When the police failed to address the issue, the aggrieved petitioner approached the High Court.

Adv. N.V.R. Rajya Lakshmi, CGSC for Union of India and RBI, submitted that the complaint was pending consideration before the police, who in turn had to take necessary action, duly taking note of the RBI circular.

The single judge bench directed the police to issue notice to the lender and enquire into compliance with RBI circular dated 12.08.2022.

“…With the above direction, this Writ Petition is disposed of. No costs. Since notice is directed to be ordered upon respondent No.5, further service of notice on respondent No.5 stands dispensed with,” the Court ordered.