Keep recovery agents at bay by working out repayment terms with lender

In extreme situations, file injunction suit against the latter to prevent it from taking coercive steps

According to recent media reports, a 28-year-old man who took an online loan of Rs 5,000 from a mobile app was harassed by recovery agents to cough up Rs 4.23 lakh. And the Maharashtra government recently sent a notice to Google asking it to remove 69 apps suspected of using unethical practices to recover money from borrowers.

Adhil Shetty, chief executive officer (CEO), Bankbazaar.com says, “Lenders have the option to initiate recovery in case of defaults, but the Reserve Bank of India's (RBI) rules clearly stipulate that they shouldn’t resort to undue harassment.”

What constitutes harassment?

According to the apex bank, agents can’t resort to intimidation or harassment of any kind—verbal or physical. Harassment includes acts intended to humiliate you publicly or intrude into your privacy or that of your friends and family members.

Recovery agents can’t make threatening and anonymous calls. Shetty says, “Persistently bothering borrowers at odd hours and use of muscle power for loan recovery qualifies as harassment.”

If recovery agents contact your friends and relatives about your debt, try to humiliate you by coming to your workplace or home without information, make non-stop calls, contact various public platforms, or put mental pressure to pay up, they are engaging in acts of harassment. They can also not use obscene or abusive language.

What the RBI rules state

RBI has put in place a comprehensive code of conduct for debt collectors. These guidelines state: “Recovery agents should handle their responsibilities with care and sensitivity, particularly aspects such as soliciting customers, hour of calling, privacy of customer information, and conveying the correct terms and conditions of the products on offer, etc.”

Financial institutions need to ensure that there is a recording of the content of the calls made by recovery agents to customers, and vice-versa.

Mukul Chopra, senior partner, Victoriam Legalis-Advocates & Solicitors says, “If the customer has lodged complaints or grievances, banks shouldn’t forward such cases to recovery agencies without disposing of the grievance.”  

Shetty adds, “Recovery should normally be made only at a centrally designated place. The field staff is allowed to make a recovery at the borrower's place of residence or work only if the latter fails to appear at the central designated place on two or more successive occasions.”

Dealing with recovery agents  

If you are being harassed by a loan recovery agent, get in touch with your lender directly, explain the situation, and try to work out repayment terms.

Utsav Trivedi, partner, TAS Law says, “File a police complaint, and also file a complaint with the bank, RBI, or the banking ombudsman.”

If matters go beyond control, talk to a lawyer. Trivedi says, “An injunction suit can be filed against the bank or financial institution so that it refrains from taking coercive action against the defaulter.”

The lender can’t acquire or auction the property or asset kept as collateral without providing notice of 30-60 days.

Menace of unregulated lenders

Many of the companies behind these apps are not registered with the RBI. Gaurav Chopra, CEO, IndiaLends and founding member of Digital Lending Association of India (DLAI) says, “Check if the lender is an RBI-registered entity. And stay away from platforms that offer something that is too good to be true.”

Several cases have been reported of apps hacking the devices on which they are installed and gaining access to the contact book and photo gallery on the device. Sandeep Bajaj, managing partner, PSL Advocates & Solicitors says, “This information is subsequently used to threaten, blackmail and coerce the defaulter into making the repayment.”

Such offences come under Section 43 of the Information-Technology Act, 2000. They are punishable with imprisonment of up to three years or fine of up to ~5 lakh, or both, under Section 66 of this Act. Bajaj says, “The victim can also file a complaint with the cyber cell by visiting its website.”

  How to handle recovery agents

. When an agent contacts you, take down his name, contact details, and particulars of the debt he is calling      about
 

. Find out if he represents the bank or a third-party agency
 

. Make notes of conversations, including date, time and place; record the call
 

. Inform the agent you are aware of the situation and intend to pay the debt
 

. If he gets abusive, inform him that you will report to the concerned authorities; stop taking his calls in future
 

. Inform the bank you don’t wish to be contacted by that agent
 

. File an FIR, detailing threats, against the chairman of the company that employs the agent
 

. Make the agent a party to the FIR (provide his contact details)
 

. Complain to the bank and the RBI