How to Deal With The Loan Recovery Process 

With about 21 million people losing their jobs due to the pandemic, according to the Centre for Monitoring Indian Economy, Banks and NBFCs have gone into a collection overdrive resulting in recovery agencies calling double the borrowers than pre-Covid-19.

The recovery process usually involves negotiating certain conditions of the loan agreement to help the borrower to repay the dues. Debt usually becomes bad when it hasn’t been paid for three months consecutively and lenders call within this time to check if the repayment was forgotten or if it was unavoidable. The borrower, after discussion, is provided with sufficient time to repay the dues. 90 days past the due date, lenders appoint recovery agents. Mandated by the RBI lenders are to provide details of the recovery agency on their website. It is the borrower’s responsibility to verify the authenticity of the agent.

Agents work on tight schedules engaging in multiple cases every day. They usually call in the first 18-30 days to seek information and time for the payments due.  Agents usually call between 7 am to 7 pm unless otherwise requested by the borrower due to business circumstances or occupational obligations. RBI also mandates a recording of conversation- time, content, and number of calls that were made by the agent to the borrower. The same should be made available when demanded by an authority.

If the due remains unpaid despite the efforts, it automatically enables the agent to meet the borrower personally. However, the visit is to be duly informed. The agent must conduct themselves according to the code of conduct laid down by the RBI. It promotes courtesy and fair treatment as per following guidelines:

(a) The borrower will be contacted at the place of their choice.

(b) Identity and Authority of the representative would be made known at the first instance to the customer.

(c) Client’s privacy must be always respected.

(d) The interactions should be civilized.

(e) Representatives will only contact the customer between 7 am- 7 pm.

(f) Any request to avoid calls at a particular time must be honored.

(g) The time, the number of calls, and content will be documented.

(h) All assistance would be given to resolve disputes.

Furthermore, the contract between the lender and agent must ensure lawfully moral methods during the process.

Lenders are vicariously accountable for the actions of the agents. Inducing the agent with incentives can lead to serious complications. Change in the agent appointed to a borrower must be duly notified by the lender promptly and such agent must carry the notice of appointment along with an identity card.

Following the above narrative, here are a few pointers to avoid recovery agents entering the doorsteps of your house:

(a) The most obvious and foremost- Pay the EMIs on time. Never delay the repayment of dues if possible.

(b) Plan and create reserves to use during the slump. Use them to get out of the debt.

(c) Just like any other relationship, communication is key here as well. Make sure to inform or ask for advice from the lender in case of an unforeseen circumstance that builds trust and understanding.

(d) Avoiding calls or meetings with the agent will create mistrust. Determine your payment ability and do not overpromise.

To err is human. Not everyone traps themselves in debt willingly. There are multiple methods and assistance provided to help get out of a debt trap.  Instead of carrying the burden alone, it is advisable to seek help from lenders, family and friends and professionals in debt settlement. Moreover, RBI monitors the work done by lenders and agents to make the borrower or client comfortable. With the proper knowledge and assistance, what seems strenuous can be finished smoothly.