Banks or Gangsters???

Every afternoon as I move out of my office after the lunch for a walk outside, I meet a score of salespersons. They sell credit cards, insurance and loans.

Credit card sales persons tell me that their card comes “Life time free”, insurance guys tell me the tax benefits of taking their insurance policy, while the loan guys tell me the ease with which I can borrow money, they even go to the extend of telling me that I need not provide my pay slip!!!

Since I am the son of a banker, I have frequently heard my father call up loan defaulters and shouting at them, threatening to seal their factory/shop and take possession of it. He has narrated several instances wherein people provide dubious documents to take loan and how a person should be alert enough to see through such people. He was training me on “people skills”.

He used to tell me that being a public sector bank, he had a lot of difficulty collecting money from loan defaulters. He had to call them up, then relax on the rules a bit if the person is not a known defaulter. If the person did not respond after numerous calls, then the case was taken to the Debt Recovery Tribunal, which automatically made it a police case. The person’s assets were sealed and they were sold in auction to recover whatever money that was to be paid by the person. This way of recovering loan amount was time consuming, thanks to the effective Indian Penal system.

With private banks entering the banking domain, a new method of recovering money is coming to the fore. The use of muscle power or goondas to intimidate the defaulters. This method is very effective and is followed by many of the private banks. Since the banks are assured of the return of the money, they are a bit lax in evaluating the credit worthiness of the person taking the loan.

Let us suppose that a person had taken a vehicle loan from the private bank and had missed a repayment. The bank sends him a letter telling him that he had missed a repayment and needs to pay up within 7-10 days. If he does not pay up within that time a gang of 10-15 well built, mean looking men appear in your house, asking for money. They may accost you in public places too.

The defaulter is forced to pay the bank, since his name has been disgraced in public.

It is an effective method to combat the increasing the NPA values as well as to reduce to number of defaulters, but the integrity of the method needs to be questioned.

India is a democracy, and use of goondas or any other unauthorized source of power to get what one wants is illegal. What is the difference between the methodology adopted by these private banks and armed dacoity or robbery? What rights does the defaulter have if the bank intimidates or forces him to pay money?

The private banks scoot behind people, begging them to take loans, and when someone takes a loan and defaults, they use force. The person might default due to a variety of reasons, may be he is a fraud, but there are many people who might have defaulted due to genuine reasons, like a sick relative or a loss in business. Are the banks justified in using force illegally to get even with the defaulter?

Dheeraj Jain of Delhi shows us the way. He had taken a vehicle loan from ICICI Bank, and had not paid the monthly due of Rs.1889/- in February. The bank sent him a notice to pay up within 7 days, which he could not meet.

So what does the bank do? They send 4 goondas, who stop Dheeraj in the middle of the road, abuse him, point a gun at him and force him off this vehicle and take it away. Later they sell the vehicle to someone else. All this just because Dheeraj could not pay Rs. 1889/-.

Dheeraj approached the Consumer Disputes Redressal Forum, and got justice. The court asked ICICI to repay the entire cost of the vehicle in addition to Rs.20000/- as compensation and also Rs.1000/- as cost of litigation.

Source: Article in Economic Times titled "ICICI Bank Pulled up for Goondaism"