The Finance Ministry has admitted that private sector and foreign banks made greater use of agents to recover outstanding loans from customers than nationalised banks, the State Bank of India and its associate banks.

In a written reply on Friday in Lok Sabha, the Minister of State for Finance Namo Narain Meena informed that out of total of 149 complaints (received between April-November 2012), 101 were against private sector banks (72) and foreign banks (29) for use of direct selling or recovery agents.

He also informed that 116 complaints out of 149 have already been disposed of.

Meanwhile, the number of complaints has been coming down after the Reserve Bank of India issued guidelines on July 1, 2011. These guidelines define norms for recovery of loans, including vehicle loans, along with engagement and training of recovery agents and methods to be followed by them. The guidelines ask banks to avoid adoption of uncivilised, unlawful and questionable behaviour of recovery agents during the process of loan recovery.

These are applicable to all scheduled commercial banks, regional rural banks and even primary cooperative banks.

“Banks are, therefore, required to rely on legal remedies available under the relevant statutes while enforcing security interests without intervention of the courts of law,” he said.

Bank frauds double

In reply to another question, Meena informed that the amount involved in fraud cases in public sector banks during the first six months has exceeded the total of the last full fiscal.

It is more than double of 2010-11.

According to figures, public sector banks reported 1,714 cases of frauds involving Rs 5,210.56 crore, while in 2011-12 a total of 3,392 cases with an amount of Rs 4,025.30 crore were reported.

Suspicious DEALS

The Finance Ministry said that during April-October, 2012, various agencies reported a total of 17,204 suspicious transactions (STRs) to the Financial Intelligence Unit-India.

These are for investigations of suspected money laundering, so the amount involved can not be ascertained now, Meena said.

In a reply to a question, the Minister said Foreign Currency Convertible Bonds (FCCBs) worth Rs 2,104 crore were due for maturity this month.

This amount will be Rs 667 crore, Rs 80 crore and Rs 317 crore for January, February and March, respectively.

To prevent any default of redemption of FCCB by Indian companies, the RBI has permitted restructuring of FCCBs not involving change in conversion price under the approval route.

Further, buyback of FCCBs has been allowed under the approval route at a minimum discount of 5 per cent on the accreted value up to March 31, 2013, the answer stated.

Shishir.Sinha@thehindu.co.in

(This article was published on December 14, 2012)
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