The use of recovery agents for the borrowers of Bank loan is of recent phenomenon particularly after the advent of active participation of MNC Banks. They have replicated the system what is in vogue in European countries. In India such practices were rare. Ofcourse, the musclemen were there in the business acting as agents for private money lenders. Then came the Cooperative Banking activities as a means to provide loans to the farmers and others and keep at bay the Shylocks. The Nationalised Banks after the nationalisation took to rural banking activities seriously where they were to lend 60% to priority sectors as per the guidelines of the RBI. These Banks too have laws for recovery such as Arbitration Laws, Cooperative Laws and more recently Banking Securitization Act that enable them to recover the dues. The use of musclemen or you call it recovery agents in Urban and Semi-Urban areas by the private bankers was on the rise due to spurt in issue of personal loans by the banks on personal surety. There are habitual borrowers and offenders, borrowing beyong their capacity and thus failing to repay. Such borrowes are dealt with sternly is alright. But the white collar borrowers are subjected to such teasing by the agents day in and day out through personal contact and phones, is a harrassment that could be avoided. The Banks need to recover but then there is always a decent method of recovery through distraint of movables more effective and acceptable than recovery agents.
RE:Recovery Agents - A problem to the borrower
by alert on Jun 12, 2008 09:22 PM Permalink
i dont understand why banks are allowed to send musclemen. When you dont get a proper service from a bank or if they charge unlawfully more interest, can you send goondas to the bank manager. If law does not allow you to do that how it allows the bank.
RE:Recovery Agents - A problem to the borrower
by Jitendra Madhav on Jun 12, 2008 07:59 PM Permalink
dear jamshed, i agree...but there are several other points here...
