New Delhi: Expressing the deep concern regarding the recent spurt in harassment and use of muscle-power by loan recovery agents, the Finance Minister gave a clear indication of the government's intentions. A strict warning was issued by the Finance Minister to the banks that the banks resorting to 'uncivilized' practices will be heavily penalized.
The Finance Minister was replying to a debate on the Payment settlement bill in Rajya Sabha, the upper house of the Indian parliament. He described the incidents as unfortunate and said that it was private banks who blatantly employed musclemen for loan recovery and if a PSU banker was found using such tactics, he would be 'sacked next day'.
Describing the steps taken by the government and regulating agencies to curb this menace, the Finance Minster said that Reserve Bank of India (RBI) has already drafted strict guidelines regarding loan recovery for all commercial banks. However, if required government will take further steps in this direction. "There was no role for such uncivilized measures in a civilized society," he further added.
In the past few months a lot of incidents involving excesses by loan recovery agents, which even led to suicides by hapless borrowers evoked strong criticism from different sections of the society. The banking regulators and guardians of the law came down heavily on erring banks, fined them and threatened a legislation if things didn't improve. The strong stance pushed the banks on to back-foot and they had to relent with the Indian Banks' Association also stressing the need for loan recovery agents to function within the four corners of law. Now, with the RBI guidelines regarding loan recovery agents out in the open, it is for the bankers to implement these guidelines in letter and spirit.