Are Loan Recovery Agents Becoming Nightmare and More Scary than Covid?

The second wave of coronavirus is already raising to peak and the whole country is in a pandemic. In more than 10 states of India, it’s been a very cruel situation seeing the counts of deaths due to covid and their family members are struggling to save the life of their loved ones.

Whatever the reason we are now able to understand the situation of the Indian economy and the infrastructure we have to face these kinds of medical emergencies. Who is responsible for this? Finally, everything turns back to the common people voting. Our Political leaders are busy blaming each other rather than working as a team to fight this emergency. They have learned to find opportunities in every situation.

See also: Ultimate Guide to Business Loans in India

This uncontrollable situation in India has led to uncertain Lockdowns & curfews resulting economic slowdown. More than 10 crore people lost their jobs in the 2020 covid-19 pandemic and in this 2nd wave, it looks to have increased job losses and business shutdowns. If companies and businesses shut down, job loss becomes usual. 30% of Small & Medium Business (SMB) had shut down in the last covid-19 pandemic and 60% of SMB were busy repaying their debts and marinating their workforce. No doubt this covid 2nd wave will have a lot more business shut if the business will not receive proper aid from the Government or RBI at the right time.

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People who have taken loans are now in confusion if they need to save money for their medical emergencies to save their loved ones from coronavirus uncertainties OR repay their loan and credit card installments. Somehow the corporate employees OR big business owners are surviving managing the financial crises but when we look at the middle class, lower-middle-class people, and small business owners, they are at high financial risk to face the covid 2nd wave consequences. The raise in covid cases and limited medical facilities along with the cost of treatments are making people lose hope.

On all of the above, the harassment of loan recovery agents has made people lose their patience in this worse situation. Spreading of covid, high death rates, unorganized lockdowns, and curfew has already made people go more panic and there is a huge impact on their earnings.

With the second wave of coronavirus the Banks fear that loan defaults, NPAs will rise if businesses face economic losses due to unavoidable Covid-19 restrictions. Most of the banks have already indicated RBI on the scenarios, RBI and Central Govt has to make quick decisions before things go out uncontrollable. RBI Loan moratorium will be little help to individuals and SMBs OR MSMEs.

See also: How to Opt Benefits of RBI Moratorium for Loan EMIs

Though banks know the reality of the scary covid second wave and how people are struggling to repay their EMIs, They are still aggressive in recovering the possible debts or installments from their customers before RBI announces Loan Moratorium 3.0 during this kind of medical emergency.

Banks hire 3rd party associates for loan recovery or engage recovery agents on contract with hire and fire policy. The salary of loan recovery agents will be 12-15K per month and they will be motivated with incentives on the value of collections they do. They work on strict targets and will have a lot of pressure on collections from their management. As it is more like an incentivized job, the loan recovery agents tend to be more aggressive in collections so that they can make more incentives.

The loan recovery process has certain guidelines from RBI where only a few banks follow it professionally whereas there are a lot many NBFCs and 3rd party associates who have been penalized for unethical and rude ways of recovering the loan EMI.

The Loan recovery agents initiate the recovery process through telephonic calls and then proceed with office and residential visits. Though people explain about their problem in repaying the loans which might be a medical emergency in the family, loss of job, loss of business due to the impact of coronavirus restrictions, the loan recovery agents will not react to anything apart from forcing for repayment. It’s surprising to see them trained to that level. Many of the times most of the loan recovery agents have been cursed by people for the harassment they face from the Loan recovery agents. Truecaller records show how people would have saved the loan recovery agents’ numbers with vulgar names. This is actually a demotivating factor for choosing a Loan recovery Agent job.

Though they would be doing their job as per their roles and responsibilities, few untrained or aggressive agents deviate from the RBI guidelines and force borrowers to make payments in their own rude way.

See also: Keep These Rules in Mind When Dealing With a Loan Recovery Agent

Few harassments have been reported on Loan recovery agents

  • During visits to office OR residence, they say they will not go until payment is made.
  • They stand in front of the residence for long hours creating bad scenes for neighbors.
  • They scare family members telling on fake rules on complaining to police or threat from legal.
  • Some Digital finance companies will reach the social media connections of borrowers and share the
  • Financial information, also they send text messages to friends and relatives.
  • Multiple calls from multiple recovery agents for one loan and also during the unusual time.

Things that you need to do when you face harassment from Loan recovery agents.

  • Keep police informed
  • Write to banks and RBI on the misbehavior
  • Most of the recovery agents have been manhandled by some borrowers during the process of collection. Please be aware that they are also human beings and they are doing their job for their earnings. They have no intention to harass anyone apart from recovering the payments that banks have instructed them.

Few good things about loan recovery agents

  • They explain the recovery process and time that can be extended for payment also restructure facilities if available
  • Few recovery agents have understood the problems and have extended support paying from their pockets
  • Finally, they connect to the borrower in a friendly manner and make their recovery process smooth.

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Debt recovery or loan recovery is a formal process in every bank to keep their asset books good and till Covid 19 started there were no many allegations as things were going well and the economy was much stable. 80% of the EMIs and repayments were happening without any issues. Post covid -19 initial lockdown and RBI loan Moratorium 1.0 & 2.0, banks started experiencing more defaults through Govt released relief packages. Before people or sustained business coming out of the impact of initial covid-19, Covid 2nd wave has badly hit the new hopes and economy.

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Most of the celebrities and rich people are losing their life though they have good financial backup and just imagine the life of common people. Government & Banks need to understand this medical emergency of the covid second wave and take up with RBI for next actions on RBI loan moratorium 3.0 to relieve people from paying EMIs for few months until this medical emergency is properly addressed and people have enough money to save their loved ones from losing them for the covid second wave.

RBI Loan Moratorium 1.0 – 2.0 during last year Covid 19 & restructuring had helped many individuals and business

to still sustain and now the situation with Covid 2nd wave is more horrible than before.

Let’s wish we will fight this deadly virus and get vaccinated as soon as possible and stay safe.

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