Facing harassment from loan recovery agents can be distressing, but there are steps you can take to protect yourself and address the situation effectively. In India, several laws and guidelines are designed to regulate the behavior of debt collectors. Here’s how you can deal with harassment by loan recovery agents:
- Understand Your Rights: In India, the Reserve Bank of India (RBI) has issued guidelines that prohibit abusive practices by recovery agents. They must treat borrowers with dignity and respect and cannot use coercion or intimidation. Familiarize yourself with these guidelines to recognize any violations.
- Keep Detailed Records: Maintain a log of all interactions with recovery agents, including the dates, times, and details of the conversations. Save any messages, letters, or emails from them. This documentation can be crucial if you need to file a complaint or take legal action.
- Communicate in Writing: Whenever possible, communicate with loan recovery agents in writing. If harassment persists, consider sending a formal letter to the bank or financial institution requesting that they cease all contact. Ensure you keep a copy of the letter and any proof of delivery.
- Report to the Authorities: If you experience harassment, report it to the bank or non-banking financial company (NBFC) from which you took the loan. You can also lodge a complaint with the Banking Ombudsman, an RBI-appointed official who addresses grievances related to banking services. For complaints against NBFCs, approach the RBI’s Department of Non-Banking Supervision.
- Seek Legal Advice: Consult with a lawyer specializing in consumer rights or financial law. They can provide guidance on how to proceed and may help you file a case if your rights are being violated. Legal professionals can also assist in negotiating with creditors to resolve the issue.
- Approach Consumer Forums: You can file a complaint with consumer forums or consumer courts if you face harassment. These bodies address grievances related to unfair trade practices, including harassment by recovery agents.
- Explore Debt Resolution Options: If you are struggling to repay your loan, consider exploring debt resolution options. Contact your bank to discuss restructuring your loan, extending the repayment period, or reducing the interest rate. Financial advisors or credit counselors can also provide assistance in managing your debt.
- Stay Calm and Composed: Dealing with harassment can be emotionally challenging, but it’s essential to remain calm and composed. Avoid making any commitments or payments during phone calls. Instead, focus on gathering information and documenting the interaction.
- Educate Yourself: Understand the terms and conditions of your loan, as well as your rights as a borrower. Being well-informed can help you navigate interactions with recovery agents more effectively.
- Utilize Helplines and Support: There are helplines and support services available for individuals facing harassment from loan recovery agents. Organizations such as the Consumer Guidance Society of India (CGSI) offer advice and assistance to consumers.
How To Protect Your Rights as a Consumer or Borrower?
Defaulters may lodge a complaint at the police station against the bank and the recovery agency. However, defaulters have the option to speak with the magistrate if the police are unable to accept a complaint.
- One may file a civil injunction suit:
In the event that the police do not take any action, the borrower may file a civil court request for relief. The court has the authority to rule in favour of the borrower and to order the agent to desist from engaging in such unlawful and menacing behaviour. Additionally, there’s a good chance the court will provide a decision that strikes a balance and benefits both sides.
- Raise a complaint with the Reserve Bank of India:
The RBI has created a set of guidelines for recovery agencies in response to an increase in complaints of harassment by lenders and agencies. Therefore, the borrower can get in touch with the RBI and lodge a complaint if they believe that agents or lenders have mistreated them. Guidelines violators will face severe consequences from the Reserve Bank. They might think about temporarily prohibiting the bank from employing recovery agents in a specific region. If guidelines are consistently broken, the RBI may consider increasing the ban’s term or geographic scope.
- Defamation suit:
If the recovery agent defames borrowers in any way like calling their friends or family, creating a scene at their office, or humiliating them in front of neighbours, then they have the right to file a defamation suit against the bank and the recovery agent.
- Trespass objection:
A trespass complaint can be filed for disregarding an individual’s rights if recovery agents illegally intrude into the borrower’s home without permission.
RBI’s Lender Guidelines
Not every action taken by a lender qualifies as harassment. Lenders are allowed to recoup the debt from borrowers using just and lawful means. When a loan defaults, the lender can usually pursue loan recovery through a procedure that complies with the RBI’s requirements. Lenders are permitted to recoup the loan amount borrowed as long as they follow certain rules.
Some of the Key Highlights are:
- Fair Practices Code: When it comes to loan recovery, banks and other financial institutions must abide by this code. The recovery process’s foundational principles of openness, equity, and dependability serve as the foundation for this code. Borrowers can learn about the techniques utilized for recovery as well as how they should be treated during loan recovery by looking at this code.
- Avoidance of harassment: The lender is not permitted to employ any kind of verbal or physical abuse, threats, or other forms of harassment while the debt is being recovered.
- Privacy & Confidentiality: Unless mandated by law, lenders are not permitted to divulge information about a loan to outside parties. They must protect the confidentiality and privacy of the borrower’s personal data.
- Notice of Default: If a borrower defaults on a personal loan, the lender must issue a written notice of default. This notice should list all the details about the default, the amount due, and the actions the borrower should take to correct the default.
- Recovery Agents: Lenders can engage recovery agents to facilitate the loan recovery process. However, the actions of these agents must be aligned with the code of conduct established by the RBI. It would be appropriate if they carry the identity card, authorization letter, and copy of the notice issued by the bank, act with decency, and confine to the legal framework.
- Auction of Moveable and Immovable Property: Should the borrower fail to make loan payments, the bank may hold an auction of their Moveable and Immovable Property. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the RBI’s Security Interest (Enforcement) Rules, 2002 must be followed in order to accomplish this. Rather of going to court, banks might conduct the auction using the legal remedies provided by both statutes.
- Repossession of Property: Should a re-possession clause be legally enforceable in your agreement with the borrower, banks may be able to seize possession of the property in the event that the loan is not repaid. When the contract is executed, the lender should be made aware of the repossession clause. The contract’s terms and conditions must include information regarding the notice period, waiver of the notice period, and repossession procedure. It should also contain information regarding the borrower’s last opportunity to repay the loan prior to the sale or auction, as well as the steps involved in the process.
Conclusion
As a borrower, it is essential to know your rights and what measures you can take to deal with loan recovery, lenders, and harassment by agents. Also, borrowers and lenders must be well aware of the RBI guidelines which promote transparency in the loan recovery process. These guidelines ensure that the rights of all – Lenders, borrowers, and recovery agents are involved.
Get in touch with us today at www.Settleloan.in and embark on your path to financial freedom
