The Hindu : Opinion / Letters to the Editor : Recovery agents

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Monday, Nov 05, 2007
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Opinion - Letters to the Editor

Recovery agents

The editorial “Banks and their recovery agents” (Nov. 2) is timely. The incidents of harassment, some of them driving borrowers to suicide, have sent shock waves among the customers, especially those belonging to the middle class. The advent of new private banks and foreign banks has not only transformed traditional banking drastically, but also heightened the borrowing instincts of customers. Traditional banking relied on securities for making any type of advance. But now banks offer uninhibited loans with the result that customers resort to thoughtless multiple borrowings, unmindful of their repaying capacity. When defaulters find new ways to elude repayment, financial institutions are compelled to device stringent measures for recovery that include publication of photographs and employment of recovery agents.

Banks and other financial institutions should strengthen their procedures for issue of loans and ensure that recovery agents exercise means that are well within the legal framework.

R. Ahalya Padmanabhan,

Tiruchi

* * *

I receive a number of phone calls from banks asking me to avail myself of their loan facilities. I refuse to fall in their trap because I believe in living within my means. Loans can be classified as productive loans and consumption loans. It is the second category that is dangerous. The loan system is several decades old. It has ruined a large number of families, particularly in the U.S.

C. Vidya Sagar,

New Delhi

* * *

If there is proper follow-up of the loan accounts and, where necessary, timely efforts are taken for recovery of loans by the bank staff, overdue loans will not go out of control necessitating the engagement of agents for recovery. Slackness in proper evaluation of loan applications and target-based sanctioning of loans account for the huge bad debts.

V. Sethumadhavan,

Woburn, Massachusetts

* * *

Banks which observe basic principles of lending can recover loans using soft methods. It is only the banks that go easy on sanctioning loans pushing the middle and lower middle classes into a debt trap that adopt tough tactics. Had the RBI laid down guidelines regulating the outsourcing of loan processing and recovery methods when private and foreign banks entered the banking scene, there would have been no need for corrective measures now.

S. Veeraraghavan,

Madurai

* * *

To mitigate the sufferings of the borrowers and crack down on erring recovery agents, may I suggest that the RBI set up borrower helplines?

R. Srinivasan,

Chennai

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