The Hindu Business Line : Steel fists, no doubt, but hidden in a velvet glove

Hyderabad/ Chennai, May 4 Loan defaulters can hope to be treated a bit more civilly when recovery agents turn up to collect their dues. Muscled ruffians hollering threats outside your door and waking up your neighbours, or waylaying you when you are driving somewhere or embarrassing you at your office may soon be a thing of the past.

But don’t breathe easy just yet. In their place, you may soon encounter a more refined version, who is still going to try and collect the money from you. Just that it will be done more pleasantly and without damage to your limb or life.

The unpleasant experience of a number of private bank customers has forced the central bank in the country to put banks on notice and issue guidelines on this issue. Steel fists will now be hidden inside a velvet glove, in a manner of speaking. And brawn is soon going to get a dose of brain!

Certificate course

In a year’s time, banks will have to employ only those agents who have completed a certificate course in recovery norms designed by the Indian Institute of Banking and Finance (IIBF), as per a notification issued by the Reserve Bank of India a couple of weeks ago. Mr Balachandran, Director, Institute of Banking Personnel Selection, when asked about the impact of this move, said, “The very fact that there is a certification and selection process will inculcate a sense of responsibility among recovery agents. They will then operate with knowledge, sophistication, awareness of legal implications and their responsibility as an agent.”

The RBI had asked the banks to ensure that the recovery agents are properly trained to handle their responsibilities with care and sensibility in aspects such as hours of calling, privacy of customer information, etc. Further, the contracts with the recovery agents should not induce adoption of uncivilised, unlawful and questionable behaviour or recovery process, it said, among others.

Not easy for banks

All this would mean greater difficulty for the banks. “While we respect and implement whatever is prescribed by the apex bank, we must confess that all this will not be easy for banks. The due diligence will be stricter now and the legal course to recovery (in contrast with using agents) time-consuming and expensive,” a senior ICICI official told Business Line.

An HSBC spokesperson said the bank was implementing RBI guidelines in letter and spirit and would do the same in employing recovery agents. The Reserve Bank Governor, Dr Y.V. Reddy, answering a question at the press conference after the credit policy, said that banks were being sensitivised about the recovery process. They have become cautious and there has been a positive effect, he said, when asked if the response from banks was satisfactory.

Related Stories:
On bank loans and defaulters, and…
A borrower’s recourse to law
RBI issues revised draft guidelines for recovery agents
Banks asked to follow legal procedures for taking possession of hypothecated goods

More Stories on : Banking | Non-Performing Assets | RBI & Other Central Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Bay hums again as Myanmar quivers

BPO vendors see larger US deals by year-end

‘Maharaja experience must make a comeback for customers’

New Swiss law to curb flow of black money

JK Tyre & Industries (Rs 139.30): Buy

Day Trading Guide

‘Essence of Wave Principle will never change’

Liquor cos put ad campaigns on hold

Power efficiency, the new chip norm

Short-term weakness persists in gold

Steel fists, no doubt, but hidden in a velvet glove

Public less enthusiastic to market-linked insurance plans

Dalal Street may see consolidation at current levels