The Hindu Business Line : RBI may ban recourse to recovery agents

Retail borrowers and credit card holders, who have been harassed by recovery agents sent by banks, may find some relief if the measures suggested by the Reserve Bank of India are put in place. In the mid-term annual review of the annual monetary policy released today, the RBI has come down strongly against the practice of recovery agents employed by banks.

“The RBI would consider imposing a temporary ban (or even a permanent ban in case of persistent abusive practices) for engaging recovery agents on those banks where strictures have been passed or penalties have been imposed by a High Court or Supreme Court or against its directors or officers with regard to the abusive practices followed by their recovery agents,” the policy said.

A circular in this regard would be issued by November 15, the policy added.

When asked if the RBI would consider a ban on recovery agents, the RBI Governor, Dr Y.V. Reddy said, “We are hoping our threat will work. We don’t want to take action because there is sensitivity among banks. A bank has licence to recover, but if an agent is not conducting well, then we may tell the bank not to use recovery agents, but use their own officers.”

Ms Chanda Kochhar, Joint Managing Director, ICICI Bank, said that most banks follow a code of conduct and duly laid out procedures when it comes to recovery. “We send letters and reminders to the customers. We also record the steps we follow to recover our dues,” she said.

Dr Reddy said that banks should not charge any fees for closure of accounts and also said that a circular to the effect would be issued immediately.

More Stories on : Non-Performing Assets | Credit Market | Monetary Policy

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