IBA to deal with recovery agent high-handedness

The Indian Banks Association (IBA) is taking extra care to see to it the debt collecting procedures conducted by banks are strictly according to the codes proposed. ICICI Bank, recently, had to cough up around Rs 15 lakh for the kin of a borrower who was allegedly harassed by recovery agents of the bank, which led to his suicide.        
               
Under such circumstances, the IBA is taking a refreshed look at its model policy on collection of dues and repossession of securities and how to make collection agents follow them strictly. Although IBA has a model policy on recovery of dues, all banks are not strictly following it is the inside office talk.

IBA has convened a meeting of bankers tomorrow to discuss the issue of appointment of recovery agents and the method being resorted by them in collecting dues. Recovery agents are generally appointed by foreign banks whereas public sector banks usually have their own branch level recovery officers to collect dues.

According to the IBA model policy, written communications, telephonic reminders or visits by the bank’s representatives to the borrowers place or residence will be used as loan follow up measures and the bank will not initiate any legal or other recovery measures including repossession of the security without giving due notice in writing.

But there are instances where outside collection agents of banks resort to unfair methods such as intimidation, physical assaults and repossession of assets without adequate notice.

The Reserve Bank of India, in its fair practice code banks for collection of credit cards dues has stated that 'in regard to appointment of third party agencies for debt collection, it is essential that such agents refrain from action that could damage the integrity and reputation of the bank and that they observe strict customer confidentiality.'

The RBI guidelines clearly states that 'Banks and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the credit card holders’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.'