RBI Strategies for Recovery Agents
To curb the harassment faced by many bank customers, the RBI on Banking Ombudsman (BO) has implied various rules to be followed by the recovery agents. Bank customers are solely a target of harassment and compulsions on various pretexts. Various banks and financial institutions hire recovery agents legally and illegally to recover the debts from their clients. Seemingly, the recovery agents have known to use unauthorised measures to acquire money from the clients. These unlawful practices have come under the discernments of the law and have been implied with certain norms to be followed.
It is believed that every recovery agent follows unlawful practices like harassment and bullying in order to get the money from the customers. This apparently led to a chaos among the people. To curb the misuse and following of unlawful practices, RBI has implied the following rules;
Law authority: Firstly, it was stated by the higher officials that nobody has the right to take law in his hands and violate the democratic and constitutional rules of India. The ways of recovering money from the bank customers involved just harassment and bullying which has to be discouraged.
Law of possession: In case if the bank customer fails to repay the debt, the law of possession of the individual’s vehicle or property has to be resorted. Every bank should have certain norms which an individual should follow and should be enlightened about it before hand.
Authorities to be reported: Every action on the individual’s failure to pay the debt depends on the amount taken. If the sum exceeds more than 10 lakhs, the case is forwarded to either the Debt Recovery Tribunal or the high court.
Prior notice: A prior notice has to be given to the debtor to pay within 60 days from then. Non-payment within the given time will result in the possession of property or vehicle by the bank or the financial institution by legal means.
Bank Ban: RBI stated that if any of the bank or financial institutions adopts the illegal methods of hiring bullies and recovering their money, it would result in the temporary ban or even a permanent ban on them.
Penalty: If the Indian higher courts suspect any such complaint, the financial institutions are subjected to pay the penalty and undergo strict actions.
Train the recovery agent: A bank has to hire a trained recovery agent who is certified for a year, along with the Indian Institute of Banking and Finance (IIBF) course as per the banking regulatory. Also the RBI suggests that the bank has to have a background check before hiring the recovery agents.
Whom to approach: If a bank has not received the amount from the debtor within the given time it can approach Lok Adalats. Any personal loans, credit cards or debit cards not refunded by the customers, the Lok Adalat will take an action for the bank.
Bank responsibility: If a recovery agent resorts to humiliating and harassing the customer, the bank is wholly responsible for the damage done. Henceforth the appropriate bank has to train its recovery agent and impose strict rules to follow the RBI guidelines and banking codes throughout the recovery process.
Strict rules: The bank customers should not be harassed or victimized during the recovery process. Prior permission has to be sought with mutual consent of both the bank and the customer. Usage of abusive language and humiliation against the customer is strictly prohibited.
Police complaint: If a customer is harassed by the recovery agent, he/she can approach the police and lodge a FIR written complaint.
Contact number: When hiring a recovery agent, the bank has to beforehand give the selected contact numbers or the address to both the buyer and the recovery agent. The recovery agent has to call only on the given address and the numbers.
Decrease in incentives: Banks should avoid promising high incentives or targets for the recovery agents. This in turn leads to the usage of unlawful practices against the customer. Banks should ensure that the recovery agents do not take up uncivilized, unlawful questionable methods.
Cheque: Never hand over cash to the agent. Either give a cheque or go to the bank and deposit the money with the loan department.
