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RBI lays down law for debt recovery

india Updated: Dec 01, 2007 03:52 IST
Vyas Mohan
Vyas Mohan
Hindustan Times
RBI issues draft guidelines on recovery agents

Say goodbye to debt recovery agents’ harassment. The Reserve Bank of India has framed draft guidelines for lending banks to follow in a
bid to restrict their agents’ intimidation.

Once the guidelines are in place, a due diligence of the agents will become mandatory.

<b1>Banks will have to ensure that borrowers are given enough notice for repayment and that they are handed over recovery agents’ details.
The agents will neither be able to harass you by calling at odd hours, nor will they be able to use goons to extort your money. There can be no verbal abuse or physical intimidation, nor can there be public humiliation or violation of borrowers’ privacy. Banks will also have to put in place a grievance-redressal mechanism for borrowers.

Referring to its earlier guidelines, the Reserve Bank said: “Banks were advised to ensure that recovery agents are properly trained to handle their responsibilities with care and sensitivity, particularly aspects like the hour of calling and privacy of customer information."

The central bank was spurred into action after a spate of harassment complaints, and even suicides, by borrowers. For instance, Andheri resident Prakash Sarvankar committed suicide on September 17 following harassment by a recovery agent.

Making it clear that banks would be held responsible for their agents’ misdeeds, the central bank said: "Banks are responsible for their agents’ actions. They must ensure that agents strictly adhere to the guidelines."

The banking regulator also requested the Indian Banks’ Association and Indian Institute of Banking and Finance to formulate a certificate course for sales, marketing and recovery agents with a minimum of 100 hours’ training.

"The key issue is the process of debt recovery. The certificate programme is a good move; it will ensure a better recovery process," said Kamleshwar Rao, executive vice-president (home loans, retail), Kotak Mahindra Bank.