(a) whether recovery agents of the private sector banks are harassing the defaulters over a period of time despite the guidelines of the Reserve Bank of India (RBI)/Supreme Court;
(b) if so, the names of such banks which have repeatedly violated the said guidelines, bank-wise; and
(c) the remedial measures taken/being taken by the Government in this regard?
FINANCE MINISTER (SHRI PRANAB MUKHERJEE)
(a) to (c): A statement is laid on the Table of the House.
STATEMENT REFERRED TO IN REPLY TO PART (A) TO (C) OF LOK SABHA STARRED QUESTION NO. 192 FOR
06-08-2010 TABLED BY SHRI ADHI SANKAR AND SHRI YASHBANT N-S. LAGURI REGARDING HARASSMENT BY
RECOVERY AGENTS
(a) to (c): Reserve Bank of India (RBI) has reported that 120 complaints had been received
by 15 Banking Ombudsman Offices in the year 2009- 2010 regarding non-observance of RBI guidelines
on engagement of recovery agents by Private Sector Banks. Further, it has also been reported that
HDFC Bank Ltd. and ICICI Bank Ltd. have repeatedly violated the said guidelines.
The remedial measures being taken by the Government in this regard are as follows:-
# RBI has issued detailed guidelines to banks on engagement and training of recovery
agents. Banks have been advised to ensure that the recovery agents are properly trained to
handle with care and sensitivity, their responsibilities, particularly in aspects like hours
of calling, privacy of customer information etc. Banks have also been advised to ensure that
the contracts with the recovery agents do not induce adoption of uncivilized, unlawful and
questionable behavior of recovery process.
# The Banking Codes and Standards Board of India (BCSBI) has included a chapter on
`Collection of Dues` in the `Code of Bank`s Commitment to Customers`. Banks who have
subscribed to this Code have been advised to strictly adhere to this Code during the loan
recovery process. Non-adherence to this Code by such banks has been included as one of the
grounds for complaint under the Banking Ombudsman Scheme since February 2009.
# Banks, as principals, being responsible for the actions of their agents, have been
advised to ensure that the agents engaged for recovery of the dues should strictly adhere to
the guidelines and instructions issued by RBi, including the BCSBI Code, while engaging in
the process of recovery of dues.
# RBI has also issued guidelines to banks on Fair Practices Code for Lenders. In
terms of these guidelines, the banks were advised to frame the Fair Practices Code duly
approved by their Board of Directors. The Code, inter-alia, requires that in the matter of
recovery of loans, the lenders should not resort to undue harassment like persistently
bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.
# Under the Banking Ombudsman Scheme, 2006 as amended in February, 2009, Banking
Ombudsman can award compensation upto Rs. 1.00 lakh in case of complaints arising out of
credit card operations by banks, taking into account the loss of time, expenses incurred,
harassment and mental anguish suffered by the complainant. Complaints regarding harassment
by recovery agents while collecting credit card dues are being dealt with as per this
provision.
# Banks engaging recovery agents have been advised to undertake a periodical review of
the mechanism to learn from experience, to effect improvements, and to bring to the notice of
the Reserve Bank of India suggestions for improvement in the guidelines.