Due to the ongoing COVID-19 pandemic, borrowers are experiencing more and more financial stress. This has led to a fear of an increase in Non-Performing Assets among lenders, resulting in a surge of recovery agents employing unruly and coercive tactics to recover funds from the borrowers. Sunil (name changed) is one such individual who took personal loans from two different Non-Banking Financial Companies. Recovery agents started calling him for repayment when he could not pay off the debt on time.
When Sunil felt harassed by the constant badgering of recovery agents, he filed a police complaint. The 44-year-old man had begun working as a security guard to make a living after he suffered massive losses in his business. There are many borrowers like Sunil who are not able to repay their loans and have to go through the unpleasant experience of dealing with recovery agents. However, lenders cannot use coercive tactics to recover their funds. In fact, there exists a set of guidelines laid down by the Reserve Bank of India defining the do’s and don’ts for recovery agents.
Know Your Rights
The Banking Codes and Standards Bureau of India is an autonomous body of banks. It has set a fair practices Code of Customer Rights where lenders must communicate with the borrowers if/when they begin recovery proceedings. Financial institutions must also give the name of the recovery agent who will contact the borrowers. Furthermore, recovery agents can only get in touch with the borrowers between 7:00 and 19:00. They cannot, in any circumstance, visit the borrowers unannounced. It is also noteworthy that if a recovery agent wants to visit the borrower, the latter must decide the venue, and the agent has to respect the borrower’s privacy and interact with him/her civilly. The agent must also possess an authorization letter from the financial institution. That said, the recovery agent can contact relatives and friends if the borrower cannot be traced.
Dealing With A Violator
Lenders tend not to initiate action against recovery agencies and/or agents if/when they do not stick to the stipulated guidelines. However, it is pertinent to note that according to the norms, lenders are responsible for the behavior and actions of their agents. Therefore, lending institutions must ensure that their agents follow the standards. Banks must keep track of the phone calls when a recovery agent calls a borrower. If borrowers complain of abusive or threatening behavior from the agent, lenders must investigate the matter. However, that does not necessarily happen because recovery agents use numbers that are difficult to trace, and some even send WhatsApp messages that cannot be recorded by the lenders.
That said, borrowers must, in no circumstance, avoid recovery agents or ignore their calls. It is important to communicate with the recovery agent or the financial institution to ensure that there is a viable repayment plan so that you can pay off your debt sooner rather than later.
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