The Hindu Business Line : Home loan recoveries: Practices `unfair and fair'

IF you had availed yourself of a loan from LIC Housing Finance and defaulted in repayment, you will probably see your picture and that of your family members in a leading daily one of these days (if it has not appeared already!). This is the strategy taken by taken by LIC Housing Finance - of publishing the `chronic' defaulters' photograph - for recovery of its dues.

According to LICHFL sources, this has been its practice for the last 5-6 years.

"It is not new. But basically, it is targeted at chronic defaulters, who fail to respond to our calls and letters. Publishing the photograph of the defaulter is a last resort and this is done after due intimation," the source said.

"Though LIC has every right to proceed against the defaulting borrower in a court of law or under the Securitisation Act, the method resorted to by the housing finance company is unwarranted. It is aimed at humiliating or demoralising the defaulter,'' the Secretary of the Coimbatore Consumer Cause, Mr K. Kathirmathiyon said.

In a particular instance, the marriage of a defaulter's daughter was cancelled, when the prospective groom identified his to-be father-in-law's photograph among the list of pictures released in a newspaper.

LICHFL sources countered this by stating that the defaulter was informed. "He probably ignored the telegram and notices that the company issued." Stating that the practice of publicising the `family photograph' of the defaulting home loan borrowers was unethical, Mr Kathirmathiyon asked, "Would the borrower be able to regain his lost image even if he were to remit his dues?"

According to LICHFL, the company published the pictures of chronic defaulters, whose dues were huge and pending for years.

"At least 70 per cent of these defaulters rush for a settlement only after we take the final step. The hard-core defaulters prefer to ignore reminders, notices and telegram. They do not even respond to calls. We are literally at their mercy. Banks are in a better position though. They have platforms like the DRT and Lok Adalat and now, the Securitisation Act," he said.

Though the consumer body is said to hold no brief for the defaulter, according to its Secretary, the advertisement was not to fulfil the statutory requirement like taking possession under the Securitisation Act or intention to auction, but a "real threat aimed at humiliating the defaulting borrower, which should be addressed only to the individuals concerned instead of a public notification (in a newspaper).

"The court at present has imposed a stay on taking possession of residential properties. How could LIC Housing Finance issue such warning?" he asked.

He contended that the default in repayment could have been for some genuine reason or even deliberate, but the stance taken by the institution for recovery of dues tarnished the image of the borrower and projected LIC Housing Finance itself in poor light.

LICHFL sources say that while the loan defaulters rate was around 10 to 12 per cent for the industry, the Coimbatore region recorded a higher loan default rate.

Meanwhile, the consumer body has taken exception to this practice. It has urged the Finance Minister and the LIC Chairman to intervene and resolve the issue.

Meanwhile, loan defaulters are lost for words on seeing such advertisements.

More Stories on : Housing Finance | Non-Performing Assets

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