Loan Recovery Agents: Tougher Measures Needed

It took the registration of eight recent complaints of haras sment of debtors by loan recovery agents and suicide by a repeatedly humiliated defaulter in Mumbai last month for the Maharashtra government to begin putting in place measures to deal with the intimidating tactics by banks and financial institutions to force repayment, while the Reserve Bank of India (RBI) asked banks to review and monitor their loan recovery practices.

News reports about the coercive means used by loan recovery agents and about suicides by those who cannot bear the humiliation are not confined to Mumbai alone and have only been increasing of late. In February this year, the Supreme Court (SC) chastised private banks for relying on “goondas” to recover loans. The statement of the counsel representing the private bank in the case before the SC was telling. He told the court that the bank could not rely on legal procedures to recover the loans because there are millions of such defaulters. In fact, the public sector Life Insurance Corporation Housing Finance recently announced its decision to hire recovery agents across the country because of its high non-performing assets.