New Delhi: As expected, the Indian Banking Association (IBA), has made its position clear on loan recovery methods that banks in India. IBA has asked all the banks to verify the credentials of recovery agents and decide on minimum qualifications for their recruitments.
Stressing on the need for proper training and counseling for the recovery agents, the IBA Chairman M B N Rao said," Banks should ensure that proper training is given to the recovery agents that complaints against their recovery methods could be minimized. The banks should follow the industry code of conduct with regard to collection of bad debts."
Reserve Bank of India (RBI) has taken strong note of the unruly incidents involving recovery agents, which flaunted every rule and used high-handed methods for loan recovery. RBI is expected to announce extensive guidelines on loan recovery agents later this month.
IBA didn't react much to the recent ruling against ICICI Bank, in which a fine of Rs. 55 lakhs was slapped on the bank for the misbehavior of its recovery agents. "We have nothing to say except that banks would have to follow the rule of the law," Rao said.
Rao claimed that the complaints against the recovery agents can be compared with the auto industry. Like the number of accidents that happen involving automobiles, when millions of cars are sold every year, the cases of excesses by recovery agents are also rare and are exaggerated. Most of the banks have well laid out procedures and follow them carefully when it comes to recovering of loans. "Consumer forums and courts are always free to take action on the complaints of clients," Rao added.
The Indian Banks' Association (IBA) was formed on the 26th September 1946 with 22 members. As on July 2007 IBA has 150 members.
The members comprise of:
- Public Sector Banks
- Private Sector Banks
- Foreign Banks having offices in India
- Urban Co-operative Banks