Niraj who had room mates who had taken loans from different banks was consistently pestered with visits from a recovery agent. In spite of telling him that they had long since relocated, the recovery agent refused to take his word for it and claimed he was one of the defaulters and was pretending that he was not. You can imagine the exasperation Niraj felt. Well, this is a very simple form of harassment compared to the more horrific stories heard from some other customers. Recovery agents ring doorbells embarrass the bank customers who have defaulted payments before family members, colleagues and friends and sometimes are threatened with violence.

This often occurs because banks outsource the loan recovery jobs to collection agencies. While there are collection agencies which stress on being a professional outfit, screen their staff and recover loans without resorting to what is not permitted by law, most of them belong to an unorganized sector where staff screening does not happen and no stringent rules or training programs are implemented for the staff.

For some of you who might be facing such hassles, here are a few tips to help you on your way:

Never let a communication from your bank go unnoticed. Banks do block the use of a credit card when consumers default and many assume that to be the final action from the bank.

What happens is that, the pending amount and the interest levied on it keeps growing till it becomes quite a tidy sum, this is when the recovery agent enters the scene to collect the dues.

When such a scenario poised for dispute happens make an immediate complaint to the bank and get an acknowledgment for the complaint.

A call to customer care does not help you at this point unless you take care to get a reference number that you need to keep handy when you file the complaint for future reference.

Do file a complaint with the bank’s website, where there is provision for this.

When there is no response from the bank in a week or two, the next step would be to file a complaint with the banking ombudsman appointed by the RBI. You can do this at http://www.bankingombudsman.rbi.org.in.

This often solves the issue and relief measures take place immediately.

In case of situation where you are genuinely at default do take measures to rectify the situation. Make some payment towards the loan and provide additional security and interact with bank to make them reschedule your payments. Do not put yourself in a situation, where the bank reports your default to the credit bureau. You will find it very difficult to obtain a loan in future.

When you take the above mentioned measures the recovery agents cannot proceed any further with any form of bullying tactics.

It helps to bear in mind some of the rules IBA has put in place in such circumstances:

1. The customer should be contacted ordinarily at the place of his/ her choice or at his/ her residence or even at the place of business/occupation between 7 am and 7 pm.
2. Bank representatives should avoid inappropriate occasions such as bereavement in the family while making calls/visits to collect dues.
3. The bank should ensure that all written and verbal communication with its borrowers is in simple business language and should adopt civil manners for interaction with borrowers.
4. Written communications, telephonic reminders or visits by the banks’ representatives (including recovery agents) to the borrowers place or residence can be used as loan follow up measures. The bank will then give a written notice about any legal or other recovery measures including repossession of the security.
5. The bank should be willing to consider handing over the property to the borrower any time after repossession and before concluding sale transaction of the property, provided the bank dues are cleared in full.

If recovery agents do not operate within the guidelines stated above, a consumer can take the following actions :

1. If you receive abusive/threatening calls, record the call, making sure that the caller gives details like the bank s/he represents.
2. Complain to the bank along with a full transcript of the call. If recovery agents harass physically, then describe each and every detail of the incident minutely in writing. Witnesses, apart from family, can also be quoted in the complaint.
3. If the bank does not take any action within a month from the day you file the complaint, or rejects the complaint, or you are not satisfied with the action taken by the bank, file a complaint with the Banking Ombudsman or online at http://www.bankingombudsman.rbi.org.in.
4. You should also file a police complaint along with the complaint filed with the Ombudsman.