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Journalism of Courage
Concerned over growing litigations against banks and high-handedness of recovery agents, the Reserve Bank of India on Tuesday issued strong warning to banks to check such practices or be barred from engaging in such services.
8220;I am hopeful our threat would work,8221; RBI Governor Y V Reddy told reporters in Mumbai. An urgent need has risen to review the policy, practice procedure involved in the engagement of recovery agents by banks in India, he said, adding that banks are urged to follow prescribed specific considerations while engaging them.
He also said banks would have adjustments and safeguards in place to prevent such practices. In response to the tough stand of RBI on recovery agents, State Bank of India chairman and managing director O P Bhatt said such practices should not be allowed in civil society and the apex bank has decided to nip it in the bud. Bank of Baroda CMD Anil Khandelwal said the bank was against such coercive methods of recovery.
Vijaya Bank CMD Prakash P Mallya said, 8220;PSU banks do not have recovery agents and they do not form part of the system.8221; Asked if a legislation should be brought in to protect the rights of borrowers, he said: 8220;I think now people are aware and also the banks would have acted. Only if these instances continue, should a legislation be brought in.8221;
ICICI Bank joint MD Chanda Kochhar too agreed that there should be a clear policy and procedure for recovery agents. Internationally, borrowers8217; rights are legally protected along with the rights of the financiers. Egisto Franceschi, CEO, GE Money Wizard, said: 8220;In Australia, there is strict regulation both ways. There are regulations on the way you can collect. It is made sure that the customer is not harassed.8221;
Asked what needs to be in place in the absence of legal rights of borrowers, Franceschi said: 8220;I think, we need more regulations and clarity from the customers8217; point of view so that they know about their rights.8221;
