12 Mar 2012, ET Bureau.
Unable to repay your loan? It doesn’t mean you have forfeited your right to a peaceful life. The Banking Codes and Standard Board of India (BCSBI), an autonomous body, laid down a code of conduct for banks, including guidelines for the recovery of dues, in 2009. Some key clauses are as follows:
Sufficient notice: A bank is supposed to inform the borrower about his dues and give a sufficient notice period for payment. It should send a notice at least seven days before it initiates recovery proceedings against the borrower.
Time of calling: A bank cannot call you at any time of the day. A customer can be contacted only between 7 a.m. and 7 p.m. Also, the time, number of calls and content of conversation must be documented by the bank. Moreover, if you request the bank to not call you at a certain time or place, it must honour your request as far as possible.
Civil behaviour: Bank representatives are not supposed to yell or use abusive language. They must respect the customer’s privacy and should refrain from embarrassing him in front of others by divulging details of the outstanding amount. Physical intimidation and violence are, anyway, criminal offences.
Place of contact: The bank must contact the customer at the place he chooses. If no place has been specified, the agent can come to his residence. If he is not available at home, the agent can come to the workplace.
Repossession of property: The Indian Bank Association has also laid down a model policy on collection of dues, which includes guidelines for repossession of property. These are:
The bank will resort to repossession of property only as a last measure and will give a written notice to the borrower before it does so.
The bank must take reasonable care to ensure safety and security of the asset after taking custody.
Upon selling the asset, if the bank is left with any excess amount after settling its dues, it must return this sum to the borrower.
The borrower has the right to regain possession of the asset before it is sold by clearing his dues.
Complaints by customers: Any complaint of misbehaviour by recovery agents must be investigated by the bank. The customer can also take up the matter with the banking ombudsman if the bank fails to look into the complaint or if he is not satisfied with the outcome of the probe.
Details of recovery agents: Generally, banks do not chase customers themselves. They engage professional recovery agents to do their dirty job. Every customer may not be aware of these agents. Hence, banks are not only supposed to post the details of the recovery agents on their websites, but also make this information available to customers at their branches. Moreover, the recovery agent or bank representative must furnish the authority letter issued by the bank as well as his identity card.