NEWS & ADVICE : CREDIT CARDS
Loan disputes will be settled by a fast track court!
By Ankit Sharma
Nov 23, 2007
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New Delhi: Off late the topic of loan recovery methods and the harassment by loan recovery agents has got a lot of public attention and sparked big debates. The Reserve Bank of India (RBI), Indian Bank's Association (IBA), the Government of India and many other bodies have been trying to formulate a solution. A working group of RBI, IBA and Government is studying the possibility of setting up fast track courts similar to 'Lok Adalats' for tackling such disputes.

These courts will facilitate fast recovery of loans and enable repossession of property and other collateral within the framework of law. H N Sinor, Chief Executive, Indian Banks’ Association said, “What is missing in our country is the presence of some special courts, which can deal with such cases expeditiously. There is a need to create such infrastructure so that there is some legal recourse for such problems. The working group will submit its recommendations in the next 15 days.”

IBA has also stressed on the need of proper training of loan recovery agents, self-regulation in loan recovery methods by the banks and said that there is no need for any legislation at the moment. IBA has been maintaining the fact that the recent incidents involving the loan recovery agents are just aberrations and not the norm. "There may not be more than 100 cases in all where recovery agents resort to such coercive tactics. But it remains a key challenge for banks," he added.

Bank's have also downplayed such incidents and the need for a legislation, as they feel that this will provide another avenue to willful defaulters. A senior banking official expressed his consent, "A legal recourse for such events is the need of the hour and will be beneficial to both the banks and the consumers. Having such fast track courts would inculcate financial discipline among borrowers and lending institutions."

IBA is also studying such fast track courts, which are already operational in developed countries like US and the UK deal with recovery and repossession.


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