Kerala   

Arm of the law is stronger than muscle power peoplespeak

RBI guidelines clearly mention that recovery of loans through force is unlawful. The public can, and must, approach the court of law in the event of harassment by banks. But many are reluctant to do so for fear of consequences. In such cases, there must be provision for the government to interfere and rein in such financial institutions.

Neelandon Kuruvattoor

Ottappalam

Reserve Bank of India has advised banks against setting stiff targets or giving high incentives for agents in recovery of loans. Banks have also been asked to strictly adhere to banking codes and standards. Despite this, recovery agents continue to harass borrowers. The agents seem to be unaware of the fact that the banks are responsible for their actions and that they must follow the procedures stipulated.

Before a loan is issued, the bank must ensure the repaying capacity of the borrower. Upon receiving a loan application, the financial officer empowered to grant loan has to scrupulously check the documents to be pledged by the borrower. Also, loans should only be issued only to meet unavoidable and obligatory expenses. Otherwise several people will become debtors. In the last decade, 1.5 lakh farmers committed suicide in India, mostly because of non-clearance of debts. Kerala is not an exception to this. Banks should be cautious while giving substantial loans. They must realise that prevention is better than recovery.

Kunhikannan

Koyilandy

Many financial institutions engage muscleman to recover loans. They humiliate borrowers by forcibly taking possession of vehicles and property. Even reputed banks are guilty of this egregious practice, though covertly. The Supreme Court had ruled that banks are responsible for the actions of their agents and wanted the forum of the Lok Adalat to be used for loan recovery. The RBI agreed to do so.

Recently the RBI has reiterated guidelines for loan recovery which forbids abusive practices. However majority of borrowers, being poor farmers and petty traders, are not aware of their rights and succumb to the intimidation of loan sharks. Government must conduct awareness programmes and establish legal aid cells for them and enlist the services of NGOs.

M.K.B. Nambiar

Mahe

Many people do not borrow from banks and financial institutions for genuine purposes. For example, some take loan on the pretext of investing in agriculture. But the money is spent on some unproductive purpose. Loans are at times spent even on luxuries. This makes repayment more difficult. Loans are given to undeserving people. Banks and financial institutions then try to recover the amount, sometimes resorting to harassment. This is natural because it is a question of their existence. They cannot just forgo the amount. But highhanded means have to be avoided. For that, loans should be paid in instalments after verifying that the amount given as first instalment is spent for the purpose for which it was given. If the investment is for a genuine purpose, the bank can be sure that the borrower will repay the amount. If there is real loss due to unforeseen reasons, the government should intervene and write off the amount in genuine cases.

T.M. Paily

Kothamangalam

Many farmers committed suicide in the State in the past two years. Most of them had apparently not made good use of the agricultural loans availed by them. Quite a few spent the money unwisely. The government’s initiative of reviving agricultural sector by providing loans through banks at low interest rates is a welcome move. At the same time, judicious use of such financial assistance too must be ensured. Farmers face the wrath of loan recovery agents too. Many are not able to tolerate the harassment. The media should strive to create awareness among the farmers about proper utilisation of financial resources from the banks.

Krishna K.

Kochi

Despite RBI guidelines and court directives, loan recovery agents continue to pester borrowers. The apex bank and the government must devise practical means to counter this problem. More importantly, people should be made to realise that such hooliganism is unlawful.

C.A. Rasik

Kannur

New generation banks and financial institutions resort to even hooliganism to recover the loan amount. In a petition filed by these institutions before the Supreme Court, seeking use of force on customers, the court ruled that the use of force and other third degree methods to recover dues was unlawful. It added that banks are entitled to resort to legal modes for loan recovery. Even now the new generation banks keep goons to threaten borrowers.

The public must avoid such banks and ideally deal with nationalised ones. In case of an assault, the concerned may move the appropriate authority viz. the police. If they are indifferent, file a complaint before the judicial magistrate.

V.P. Ramesan

Thripunithura

Three types of banks deal with general public -- commercial banks, cooperative banks and new generation banks. The first two do not take recourse to harassment for recovery of loans. They have specific norms to follow before granting loan. But new generation banks are very liberal in granting loans. Their dealings are extremely cordial up to disbursement of loan. So, the middleclass people are more attracted to these banks. To avoid harassment, Keralites should cultivate the habit of availing loan only for genuine needs, and only after assessing their repayment capacity.

P. Prakasan

Kottayam

Banks give away loans to public without checking their credentials and repayment capacity. They employ agents too to lure the common man with attractive offers. In major junctions, students, armed with a laptop are seen canvassing for these banks. A man in dire need might fall for it. Most will not be in a position to pay back the amount. Harassment follows and at times, suicide results.

Loans for education, agriculture and personal loans should have some criteria. The amount should be utilised only for that purpose, which is not done nowadays. RBI too should impose some restrictions on banks with regard to giving loans. Adequate surety must be made mandatory.

S.N. Thiruvazhiode

Ernakulam

Some cases which caught the public’s attention, like the case of suicide of Rajani S. Anand’s, who ended life since she was not given a loan, have forced banks to be more lenient on this issue. Many people misuse this easily available credit. Problems arise when banks try to recover the amount.

The commission agents are duty-bound to collect the amounts from the borrowers. They are paid for this by the banks. RBI has issued instructions not to take stringent action against borrowers, but the banks have no other way.

Governments write off loans when they come to power. But this cannot be continued for long. Prime solution is avoiding misuse of loans.

P. Sankaranarayanan

Thripunithura

It is true that some borrowers are not very enthusiastic about repaying loans. But use of muscle power for loan recovery is unfair. RBI, in its directive on November 29, 2007, suggests approaching Lok Adalat for a solution. But it is easier said than done. Practical directives from RBI and Finance Ministry will be a great relief to the banks and borrowers. Instead of deputing recovery agents banks can constitute a recovery cell with experts in legal and financial matters. They can render free legal advice to the troubled parties according to the merit of the case.

A.K. Jayarajan

Kozhikode

The highhanded actions by certain banks (especially the new generation banks) for recovering loans should be deplored. However, it must be noted that recovery agents will not use force if they can help it. Belligerent attitude is adopted mostly as a last resort and in the case of extremely reluctant defaulters.

Both the banks and borrowers must be cautious about issuing and availing loans, respectively. Banks must correctly assess the repayment capacity of the borrower. The borrower too should have a realistic idea about his/her credit limit. Banks’ efforts for loan recovery have been widely condemned. This might embolden the borrowers, who would further delay repayment. If so, the banking sector will face serious problems.

Unnikrishnan Panavally

Ottappalam

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

Kerala doctors suspend strike for four weeks
Pilgrims protest at Sabarimala
Arm of the law is stronger than muscle power peoplespeak
Next issue
No more scurrying for souvenirs Tourism Trail
Thoughts for company
Promoting art, and the artists
Panel on Vallarpadam project
Isaac refutes reports
‘Ganja mafia’ on the run
Today at Sabarimala
Curbing campus violence Law & order
Engagements: Thrissur
Mullakkara to open farmers’ meet
Five die of heart attack
Attappady tribals face threat of extinction
Fine on motorists fills State’s coffers Law & order
In recognition

Copyright © 2007, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu