When individuals face financial difficulties that prevent them from repaying their debts, they often endure the distress caused by persistent efforts by bank-appointed recovery agents. This article sheds light on the issue of “Harassment by Recovery Agents,” exploring instances where these agents overstep their boundaries and create challenges for individuals in debt. The article’s purpose is to provide insights into preventing such harassment, understanding avenues for lodging complaints, and highlighting guidelines established by both the Supreme Court and the Reserve Bank of India (RBI).
In the following sections, we will delve into strategies for addressing this situation and seeking legal recourse against harassment.
Identifying Harassment by Bank or Lender Recovery Agents
- Excessive Contact: Making numerous contact attempts throughout the day, including early mornings and late evenings.
- Social Media Intrusion: Attempting to reach individuals through social media platforms like Twitter and Facebook.
- Coercing Major Financial Decisions: Pressuring borrowers to sell their homes or take on additional credit to repay their debts.
- Threats and Contacting Relatives: Making threats or persistently contacting the borrower’s family members or relatives.
- Rotating Debt Collectors: Employing multiple debt collectors one after the other to pursue the borrower for payments.
- Misleading Communication: Using documents or business logos that appear official but are not, such as sending letters that resemble court forms.
- Unreasonable Payment Demands: Pressuring the borrower to pay the entire debt amount or larger instalments that they cannot afford.
- Public Embarrassment: Attempting to publicly shame or embarrass the borrower.
- Third-Party Communication: Disclosing the borrower’s debts to another person or using intermediaries like neighbours or relatives to convey messages.
It’s important to note that recovery agents often have aggressive targets to meet. Their incentives may be tied to the quantity and size of collections, making them a motivated group. Dealing with them can be quite challenging.
Understanding Your Rights:
As a borrower, you possess specific rights. Familiarizing yourself with these rights will help you manage your interactions with recovery agents.
Rights of Customers Against Harassment by Recovery Agents
- Verification of Identity: You can request recovery agents to provide their identity cards issued by the bank or authorized by the bank.
- Privacy Protection: Your privacy is protected. Recovery agents are prohibited from discussing your debt with anyone else. Therefore, if an agent threatens to disclose your debt to neighbours or colleagues, there’s no need to panic. You have the right to file a complaint against such behaviour with the bank.
- Contact Timing: Recovery agents should only contact you between 7 a.m. and 7 p.m. However, if your work schedule doesn’t allow for this timeframe, they may reach out beyond these hours.
- Communication Preferences: You have the freedom to choose when and where to receive recovery calls. You can also specify certain times or locations where you prefer not to be contacted. However, do note that they will respect your preferences only if they believe you’re not avoiding them.
- Respectful Conduct: Recovery agents are required to maintain a polite and civil demeanour during interactions. The use of abusive language is prohibited. Additionally, written communications from the bank should be easily understandable.
- Investigation Process: If you file a complaint against a recovery agent, the bank is obligated to investigate the matter. This ensures that recovery agents are held accountable for their collection practices.
- Sensitive Circumstances: In the event of a family death or a similar event, you can request the agent not to contact you or make visits for a certain period.
- Documentation: Banks keep records of conversations between customers and agents, including call times and durations. Copies of communications sent to customers are also retained.
- Handling Disputes: If you encounter any disagreements or discrepancies regarding outstanding amounts, seek assistance from the lender.
- Seeking Assistance: If you’re facing difficulties in making timely payments due to reasons like medical issues, job loss, or changing financial situations, it’s advisable to approach credit counseling agencies for help. These services are often provided free of charge.
- Recourse Against Harassment: If you believe that an agent is not adhering to the aforementioned rules, you should file a complaint. If your concerns are not addressed by the bank, you can escalate the matter to the banking ombudsman.
Supreme Court Rulings Against Violence/Harassment by Recovery Agents
- ICICI Bank vs. Shanti Devi Sharma & Ors, 2008: In this landmark case, the Supreme Court emphasized that banks are prohibited from using strong-arm tactics to recover loans from defaulters, which could potentially lead them to take their own lives. The court stressed the importance of ethical and legal practices in the financial sector and the significance of adhering to the rule of law within a respectful society.
- Magma Fincorp Ltd. v. Rajesh Kumar Tiwari, (2020) 10 SCC 399: In this case, the Supreme Court banned taking possession through physical violence, assault, or criminal intimidation. The court clarified that recovery agents cannot intercept vehicles or buses and force passengers to disembark without appropriate legal orders.
Additionally, in a case titled “Smart Security Secret Service Agency vs. State Bank of India,” the High Court of Kerala declared the use of strong-arm tactics for debt recovery by banks and other financial institutions as illegal. The court firmly stated that such tactics were against principles of fairness, legality, and public interest.
Unable to Repay Loan, Facing Harassment by Recovery Agents: What to Do?
In many cases, recovery agents appointed by banks resort to harassment, which is both illegal and unacceptable. To effectively address harassment by recovery agents, consider these steps:
a) File a Complaint: If a recovery agent crosses the line, individuals have the right to file a complaint. Initially, contact the bank branch and inform them about the issue. If there is no response, file a police complaint, officially lodging a complaint against both the bank and the recovery agency and ensuring the police acknowledge the receipt.
b) Seek Legal Protection: Individuals can file a civil suit for an injunction against the bank and recovery agent in court. This will prevent bank officials and recovery agents from visiting the individual’s home for debt recovery, providing relief from harassment, and buying time to repay the debts.
c) Complaint with the Reserve Bank of India (RBI): If facing threats or helplessness, individuals can file a complaint with the RBI, which has issued guidelines for banks and recovery agents to prevent harassment.
d) Defamation Suit: If debt recovery is based on false information leading to a damaged credit score, individuals can file a defamation suit against the bank and recovery agency.
e) Trespass Complaint: If recovery agents enter one’s house without permission, individuals can file a trespass complaint for violating their rights under Section 441 of The Indian Penal Code.
f) Extortion Complaint: If recovery agents forcefully collect money, an extortion case can also be filed against them.
It’s crucial to remember that harassment and criminal intimidation are illegal. Individuals have the right to protect themselves and seek legal recourse against such actions.
How to File an RBI Complaint Against Banks or Recovery Agents in India for Harassment: Follow These Steps
To file a complaint against a bank or recovery agents for harassment in India with the Reserve Bank of India (RBI), follow these steps:
Step 1: Understand the Grounds of Complaint
The Banking Ombudsman handles complaints related to various deficiencies in banking services, including:
- Non-adherence to the fair practices code adopted by the bank.
- Non-observance of the Code of Bank’s Commitments to Customers issued by the Banking Codes and Standards Board of India.
- Non-compliance with Reserve Bank guidelines on the engagement of recovery agents by banks.
Step 2: Determine When to File a Complaint
You can file a complaint with the Banking Ombudsman if:
- The bank does not respond to your complaint within one month of receiving it.
- The bank rejects your complaint.
- You are dissatisfied with the response given by the bank.
Step 3: Follow the Procedure for Filing a Complaint
You have different options for filing a complaint:
- Write a complaint on a plain piece of paper.
- File the complaint online through the dedicated portal (www.cms.rbi.org.in).
- Send the complaint via email to the Banking Ombudsman.
Step 4: Note the Fee for Filing Complaint
Filing and resolving consumer complaints through the Banking Ombudsman is free of charge. There is no fee associated with the process.
Step 5: Understand Compensation for Mental Agony and Harassment
The Banking Ombudsman has the authority to grant compensation for mental anguish and harassment caused by the bank’s actions. This compensation can amount to up to Rs 1 lakh (Rs 100,000), taking into account factors like the complainant’s time, expenses, and suffering.
Filing a complaint through the Banking Ombudsman Scheme offers a quick and cost-effective avenue to address specific issues with banking services in India. Remember, no matter your financial situation, banks are not authorized to harass you. If you’re facing difficulties, consider utilizing this process to address your concerns and protect your rights.
How Our Lawyer Handles Harassment Cases: Legal Expertise
We had a client who was facing harassment by recovery agents, causing significant distress. These agents were making an excessive number of calls, up to 30-40 a day, often at inappropriate times, which also violated RBI guidelines against recovery agents. Additionally, they sent threats involving the client’s family, which was in clear contravention of RBI guidelines. Our lawyer at personalloansettlement.com took swift action by sending a formal complaint to the bank’s nodal officer and other relevant authorities. The nodal officer responded promptly, resolved the harassment issue, reduced the client’s loan burden by 60%, and provided compensation for the stress caused by the agents. Throughout this process, our lawyer stood by the client, offering unwavering support and guidance.
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