Keep these Rules in Mind When Dealing With a Loan Recovery Agent

Keep these Rules in Mind When Dealing With a Loan Recovery Agent

In the last 15 months, inflation has been hovering around 9.5 percent. In this period, the Reserve Bank of India (RBI) hiked policy rates 10 times, which did not benefit borrowers either.

Many borrowers saw an increase in their loan tenor when banks increased interest rates. Despite the most recent rise in interest rates, many lenders ‘equated monthly installments (EMIs) also increased dramatically.

See also our recommendation on RBI Moratorium for Loan EMIs, Complete Guide to Student LoanPersonal Loan and Gold Loan.

Fear of  recovery agents

In a shocking event, in 2007 Mumbai resident Prakash Sarvankar, 38, a customer of ICICI Bank Ltd who had taken a personal loan of Rs50,000, committed suicide — accusing a recovery agent of his death. These events have rendered the agent of recovery a feared character.

RBI has issued guidelines on the preparation of recovery agents and the methods of collection they may adopt.

According to the Banking Codes and Standards Board of India (BCSBI), “the collection strategy is focused on courtesy, equal care, and persuasion,” said Manju Bhatia, Joint Managing Director,, a recovery company that deals with collections on secured loans.

But those guidelines and rules appear to have had no effect on the operation of recovery agents.

The aggressiveness of recovery agents has decreased in Mumbai, but it continues in other cities, “said V.N. Kulkarni, chief advisor to the Abhay Credit Counseling Centre.” They obtain emails from debtors from other cities regarding violent collections, suggesting that while the aggressiveness of recovery agents in bigger cities has declined considerably, it continues in smaller towns.

Know the facts

Banks may provide an in house collection department, or they may outsource the job to a collection service or third parties. Bear in mind that no bank wants non-performing assets on their balance sheets or poor loans. Debt is negative for three consecutive months because it is not paid off.

“The enforcement department typically receives notes or calls the customer for recovery if the debt remains unpaid for one month. The delay in payment, however, may only be a mistake on the part of the creditor, “said a senior banker with a bank in the private sector, who did not want to be identified.” So when the debt is overdue for 90 days, we facilitate visits by the recovery agent.

This, however, depends on a bank’s policy.

In this case you could not repay on time, it is better to tell the bank of your case. The bank can be able to work on a compromise if you have a genuine reason for that. This is also based on the policy of the bank..

A credit card debt may be quickly converted to an EMI instead of overall unpaid loan amount. In certain situations, the creditor can also restructure a loan. Of course, that all depends on the past payment record.

Handling loan recovery agents

Keep in mind that recovery agents often have big goals to achieve, and can even have incentives relevant to collection amount and volume. But they are a really motivated lot so it’s not easy to handle them.

Know the rules: You, as a debtor, do have certain rights. Knowing the rights will help you handle an recovery agent.

Identity: You may ask the recover agents to reveal their identity card provided by the bank or under the Bank’s authority.

Privacy: You are allowed to the privacy. Recovery agent can not speak to any person about the debt. But don’t worry if he is going to say your debt to neighbours or employers. If he does, then you will file a complaint with the bank against him.

Time: The recuperation agent will call you from 7 am to 7 pm. However, if that is not allowed by the operating hours or job shift, you may be approached beyond this time limit.

Calls: You will pick the place and time to receive recovery calls. Also, you may ask them not to contact you at any specific location or period. For eg, if you do not wish to accept calls at work, please mention the same to the agent or bank. Know, they’ll just accept the invitation when they believe you’re not avoiding them.

Decency: The recovery agent needs to talk decently and civilizedly to you. No language which is offensive should be used. In fact, the Banks ‘recorded communication should be simple to understand.

Investigation: If you are filing a complaint against a recovery agent, the bank will review the matter. This makes recovery agents responsible for their task of collecting.

Inappropriate occasions: If there is a death or other other occurrence in your family, you should inform the agent not to contact you or allow visits for a few days.

Records: Banks record the content of customer-agent interactions, along with the time and number of calls. Banks do need to retain all backups of messages that are submitted to customers.

Disputes: If you encounter some dispute or differences regarding dues, try the lender’s assistance.

Seeking help

You may not be able to pay installments on schedule for different reasons-chronic problems, work loss or a twin-income family being a single-income household.

The causes can also remain in macroeconomic factors such as high inflation or rising interest rates. When the cause for the non-payment is not immediate, it is better to contact credit advisory agencies to seek assistance.

Debt advisory companies including Abhay and Disha often provide these services free. When you go to these centers uncomfortably, you should use mobile counselling, which is always given at no cost.

Recourse if harassed

When you do not think the agent follows all of the following guidelines, you may file a complaint. Raja said, “When a creditor believes he’s being harassed, he can first contact the bank, and then get in touch with the banking information commissioner if he’s not satisfied with their response.

While guidelines were set down to assist lenders, it is better to rework the budget of the family to make provisions to meet the unseen change in the amount of interest payments.

Final Thoughts:

Irrespective of the amount, banks should opt for legal ways to recover the debt instead of resorting to unlawful means by employing recovery agents who intimidate and threaten people. We hope our keynotes will help you face the recovery agents.


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