Hundreds of years ago moneylenders used to send “lathials” to collect their dues from poor farmers. The borrower put up with a lot of insult starting from expletives, physical torture and finally ended with the farmer’s cattle or crop finding their way out of his home.

Centuries down the line, the borrower’s situation hasn’t changed much!

“Own that new vehicle you have constantly desired, with a small help from us.”

“Our interest rates would surprise you.”

“Worried about paperwork? Calm down.”

Funny how the catchy advertisements by banks don’t mention a word about the rogues that arrive at your doorstep when you fail to pay up an EMI!

Welcome to the world of loans where borrowing can be a handicap, literally, if you were go by the events that have unfolded recently.

What has attracted more attention is not the quantum of compensation ordered recently by The Delhi State Consumer Commission, but the sheer brutality of the violence on an innocent person who was in no way connected to the loan doled out by the errant bank.

“Turns out that the loan collectors turned were really serious about their pound of flesh or else how could you explain the 17 stitches on the poor youth’s skull?” asks Arul Rao, a bank manager himself who has recently bought a car on loan.

Agreed that the bank hired collection agents to repossess a car after some of the car loan repayment cheques bounced, but what I find strange as a customer myself is the lack of promptness when it comes to acknowledging timely payments.

The fact that even when I pay up my dues, my bank never takes notice but they are always unflinchingly attentive when you miss a deadline even once. Isn’t there something missing?

Srilata Dakshinamoorthy, an IT professional, expressed her genuine anguish when she said “At least eight people will call you and ask about the credit-card payments that you made 10 days ago…never do they bother to check the records. How long do we have to put up with this?”

May be the recent spate of events has just blown it out of proportion, Karthik Chandran, an MBA student says. It’s an easy and accepted relationship. Borrowers borrow, lenders lend. Problems crop up when either of them does not keep their promise, adds Karthik.

Customer service, if there actually exists such a term, is poor with banks employing unqualified and discourteous people. I went through some ads that appeared on leading job portals for positions related to the loan recovery/collection area. This one caught my attention the most.

“Managing auto product delinquencies through outsourced collections vendors, liaisoning with law enforcement agencies and its effective utilisation…” says the advertisement.

When I brought it to the attention of Samit Baruah, an HR consultant, he was quick to point out that the description actually spells out all that is needed to understand.

The words outsourced vendors mean that the bank will alienate themselves from the recovery agents and the agency is most likely to be blamed, in case of a problem. Liaisoning with law enforcement agencies ensures that no matter gets out of hand and effective utilisation, Samit smiled stating the obvious.

The idea of recovery is basically a good one. Just that here the wronged is a lender. Young people can actually find the job interesting as it does have a feel-good factor. Worldwide loan delinquencies are pretty high that ensures these kinds of jobs are always there and salary is directly linked to the agent’s performance.

“The moot point is neither the job of loan recovery (outcome) or the loan (cause). The question is whether any form of physical abuse is warranted when a borrower turns out to be a defaulter. In any case, the lender can always take possession of financed assets with assistance from police,” points out Vishal Bharadwaj, a lawyer practising in high court.

There has been public outrage after it was found that the agents had forcibly dragged out the victim from the vehicle, beaten him up with iron rods and left him bleeding as they drove away. The borrower was safe inside a club, presumably unaware of his lucky stars.

“Unfortunately, all people are not as lucky. Some people will be depressed or ashamed if something like this happens to them. My elder brother had a painful experience with agents of a leading Indian bank. He was on the verge of suicide,” Deepthi, a close friend confessed.

The Reserve Bank of India Governor, Dr Y. V. Reddy, has warned that they would hold lenders responsible for offences usually committed by loan recovery agents hired by them, acknowledging the real situation.

“In an ironic sort of way this highlights the hazards of India’s economic makeover over the past 15 years since the country switched from a socialist-style state to a more open economy. Policies to allow private banks and egg on competition have led to rapid expansion and fuelled an economic razzmatazz. But loan defaults and threats by loan collection agents have also been greater than before,” Gautam Basu, an economist employed with a leading mortgage institution pointed out the fallacy.

The recovery agents hadn’t even cared to establish the identity of the man they had beaten up. Poor communication between the systems (in these days of core banking solutions) might have led to these situations erupting in near future also. Reportedly, the bank had sent no notice saying that the borrower’s instalments were not regular.

Preethi, who runs a consumer welfare centre, emphasised on the necessity of a lender liability law. “Harassed bank customers will get relief if the higher authorities fix lending terms and conditions and crack down on unfair recovery means. The flipside for those who are against strong-arm tactics is that you usually get to hear of the victim’s plight after it has actually happened…something has to be done which is pro-active!” she said.

If you prick us, do we not bleed?

If you tickle us, do we not laugh? If you poison us, do we not die?

And if you wrong us, shall we not revenge?

My zealous colleague Ramesh played devil’s advocate on this one.

“Agreed, over-aggressive lending without appropriate carefulness is partly accountable for loan defaults. But the incident is suggestive of a deeper universal problem that troubles consumer finance in India. There is the lack of credit history, when it comes to individual borrowers.

And secondly, it is not unheard of for some borrowers to evade their dues to one bank and then blissfully take a loan from one more. Banks can do nothing but mail legal notices,” he argued. His arguments were strong. My defence is if you agree to give loans on phones, don’t require income proofs for car loans, are you not inviting the wrong types of borrowers?

The responsibility of returning the loan lies with both the parties. But using muscle power can be of little help. Violence automatically divides the two sides into adversaries.

Yes, it takes banks much too long to recover assets financed by them but can this really justify the actions of banks in sending thugs after loan defaulters? I think NO.

The problem is, be it the second or third big financier for car loans in India, banks forget to show an atom of the respect and courtesy, after the loan has been disbursed.

Have you been treated badly after taking a loan?

Why should all customers be treated as defaulters?

Are you not bargaining for trouble when you apply for a consumer loan that could practically land you in hospital?

I really want to know.

Send in your anguishes, complaints and arguments…

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