FAIVM seeks regulation for bank recovery agents

Federation of All India Vyapar Mandal spoke out against the illegal process used by recovery agent for loan/interest recovery by banks/NBFC.

The post-coronavirus lockdown has caused a deep financial crisis for traders and the general public due to the sluggish economy. During this crucial moment, the income of small businesses and the middle class of society has been greatly affected and delinquencies have begun to arrive in installments or interest on loans provided by banks or private lenders.

FAIVM mentioned, in a letter addressed to the Minister of Finance, that small entrepreneurs obtain only a 5% loan facility from the banking system. The remaining 95% receive loans from nonfinancial financial companies or other private sources or lenders. For those who are availing credit from banks they are receiving various reliefs and concessions, but those who have availed credit/loan from private lenders or private banks, who represent about 95%, are now facing a difficult time as their lenders are pressuring you to pay fees and interest Delinquent fees and interest are visible on auto loans, personal loans, home or jewelry loans, etc.

Private sector banks and private sector loan providers have maintained recovery agents for loan recovery. He threatens the debtor if he cannot pay the fees or interest, he insults him socially and he does not hesitate to take justice into his own hands. Although these types of breaches are already covered by various civil laws, the recovery agent, especially the laws, uses all the illegal tricks to recover their dues and interests, such as sucking the blood of a deceased person.

Mr. VK Bansal, All India Federation National General Secretary Vyapar Mandal said they had urged the Finance Minister of the union that since some rules laws have been enacted for other organisations, some laws for the agent should also be enacted. of recovery.

FAIVM in its letter dated September 26, 2020 suggested some guidelines to be followed during the recovery process.

1) Each bank or financial institution must be required to submit a list of accounts of its recovery agents to the corresponding police station in jurisdiction.

2) Each recovery agent must first deliver to the local police the business agreement with the bank or financial institution, the guidelines of the banks or financial institutions, etc. for a better understanding of the matter by the police officer.

3) It should be mandatory for all recovery agents to give prior information to the local police about the criminal history of their employees.

4) Whenever the recovery agent is sent for recovery, first of all it must be mandatory to inform the local police by the bank or financial institution and any conversations related to the recovery of the debtor must be done only in the presence of the police. The government must ensure that no recovery agent can take justice into their own hands.

5) In many cases, the value of the pledged assets or securities is greater than the amount of the loan. In such cases, recovery is not possible for a long time. In such cases, recovery should only be done by court order.

6) The government should organize the help of a special officer/helpline to listen to the borrower’s complaints in case of any threats or intimidation.

7) Ensuring compliance with the guidelines given above by the Reserve Bank and various honorable Superior Courts.

Mr. VK Bansal has shown his faith that small entrepreneurs are losing their businesses or sources of income due to the corona epidemic in the public interest, to save them from the wrath of recovery agents appointed by banks and financial institutions, the The government will formulate detailed rules and policies on the above as soon as possible and provide some relief in times of crisis.

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