The RBI has warned banks to guard against the harassment and intimidatory practices followed by their loan recovery agents. It warned the banks with temporary bans on employing such agents if complaints persisted.
The RBI felt that the cases would seriously jeopardise the reputation of the banking sector as a whole. It is expected to issue guidelines on debt recovery by November 15.
MBN Rao, chairman of the Indian Banks Association, told HT: “We treat depositors and borrowers with equal dignity and respect. Public sector banks do not use agents for recovery of loans.” He added: “Instances of intimidation were brought to the RBI’s notice and it asked for corrective measures. Banks have committed themselves to avoiding such aberrations.”
Consumer activists aren’t too impressed. “When the high court has already given directions on recovery agents, the RBI circular is a mere formality,” said Arun Saxena, president of the International Consumer Rights Protection Council.