The Unseen Influence Of TRAI On Financial Services: Navigating Telecom Regulations In Telesales

The Reserve Bank of India ("RBI") serves as the financial sector regulator in India; however, the Telecom Regulatory Authority of India ("TRAI") also significantly influences financial services through its control over telecommunication channels. Financial service providers such as banks and Non-Banking Financial Companies ("NBFCs") depend on telecommunication to reach their customers, making them subject to TRAI's regulations, specifically the Telecom Commercial Communications Customer Preference Regulations, 2018 ("TCCCPR-2018")¹. TCCCPR-2018 seeks to curb Unsolicited Commercial Communication ("UCC") while permitting registered entities to allow such UCC with customers who have opted for or set preferences for such services.

Key Features of TCCPR

Under TCCCPR-2018, financial service providers must engage only registered telemarketers. This mandates that telemarketers used by banks and NBFCs for promotional activities register with licensed access providers. The Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023², issued by RBI, further supports this requirement by obliging NBFCs to submit lists of engaged telemarketers, referred to as digital selling agents, to TRAI. Additionally, TCCCPR-2018 requires financial institutions to secure explicit consent from customers for commercial communications, although transactional messages, like one-time passwords (OTPs), may be sent based on inferred consent. To combat spam, the regulations also mandate the use of distributed ledger technology (DLT), which logs and verifies consumer consent for commercial communications.

Communication related to debt collection

A pertinent question arises as to whether debt-related communication made by banks and NBFCs or their recovery agents comes under the purview of UCC. It must be noted that RBI's circular 'Outsourcing of Financial Services - Responsibilities of Regulated Entities Employing Recovery Agents' dated August 12, 2022³, mandates that recovery agents must not send inappropriate messages or contact borrowers before 8:00 a.m. or after 7:00 p.m.

Trends in the Industry

TRAI has also taken steps to secure transactional voice calls by allocating a specific 160 series exclusively for service calls from regulated entities. TRAI's August 2024 mandate⁴ also requires providers to block unregistered URLs or callback numbers in commercial messages, though this restriction challenges financial institutions that rely on real-time generated weblinks for customer interactions, which cannot be pre-registered as required.

Regulatory Challenges

Despite TRAI's stringent requirements, some financial institutions attempt to circumvent these mandates. Auto-dialers and robo-calls are frequently used to bypass regulatory provisions, and many promotional calls are made using unauthorized 10-digit numbers, a method explicitly disallowed by TRAI. The 160 series is meant exclusively for service and transactional calls from regulated entities, yet some senders exploit loopholes in enforcement. Although TCCCPR-2018 requires that access providers log customer complaints and act against UCC violations, TRAI has reported that it lacks data on penalties or fines imposed on financial institutions for UCC breaches, as highlighted in its response to a July 2023 RTI application⁵.

Recent observations, as documented in TRAI's August 2024 consultation paper⁶, indicate a rise in customer complaints against unregistered telemarketers despite a reduction in complaints concerning registered entities.

TCCCPR-2018 empowers access providers to warn, limit, or disconnect services for repeat UCC violators. Although specific data on actions against financial institutions remains undisclosed, the aggregate data on punitive actions reflects a consistent effort by access providers to curb UCC.

TRAI's aggregate data underscores the ongoing challenge of curbing UCC within the financial sector, where balancing customer communication needs with regulatory compliance continues to require robust oversight and enhanced regulatory frameworks.

Conclusion

TRAI's involvement in regulating telecommunication channels has brought critical oversight to the financial sector, aiming to balance effective customer communication with stringent UCC regulations. The wide ambit of TCCPR-2018 effectively requires financial institutions as well to navigate and comply with its requirements.

Footnotes

1 The Telecom Commercial Communication Customer Preference Regulation, 2018, Telecom Regulatory Authority of India, available at: https://trai.gov.in/sites/default/files/RegulationUcc19072018.pdf

2 Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023, Reserve Bank of India, available at: https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12550

3 Outsourcing of Financial Services - Responsibilities of regulated entities employing Recovery Agents, Reserve Bank of India, available at: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT1085404663A577943BBB344A37057621C17.PDF

4 Press Release No. 53/2024, Telecom Regulatory Authority of India, available at: https://www.trai.gov.in/sites/default/files/PR_No.53of2024.pdf

5 'Supply of Information under RTI Act', Telecom Regulatory Authority of India, available at: https://www.trai.gov.in/sites/default/files/RTI_July_20092023.pdf

6 Consultation Paper on Review of the Telecom Commercial Communications Customer Preference Regulations, 2018, Telecom Regulatory Authority of India, available at: https://www.trai.gov.in/sites/default/files/CP_28082024.pdf

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