Increasing costs of steel and other such inputs have already led to an increase in car prices. Add to that the sky-rocketing fuel prices and owning a car becomes bloody expensive.
What about those who already own a car, especially the ones who have bought them on loans? Rising interest rates have had a greater impact on these borrowers in terms of the increase in EMIs. The slack in the job markets, stop on salary increases…mounting pressures of inflation on expenditure… All these mean that a lot of borrowers are moving from being car owners to car loan defaulters.
Wait, this isn’t over.
Banks seem to be taking to tougher recovery measures. On the other hand, the Supreme Court extended the deadline on repossessing and selling defaulters’ cars to three months from the erstwhile 24 hours deadline.
These developments have had a two-pronged impact on the sector: lenders have made lending norms stricter and old car prices have dropped.
Finally the good news - old car prices have dropped by 15 to 25 per cent. About a quarter of the cars in this market are repossessed cars. Borrowers who can get a loan can get good cars at cut rates. They could also vie for a luxury car as these prices will see steeper falls.

If a recovery agent knocks at your door you don’t have to hide in your house or avoid them by asking one of your family members to speak to them. They cannot harm you or force you to pay the outstanding at all.
The RBI has issued strict guidelines to protect the interest of the borrower and to stop unethical practices of recovery agents. You will find here the RBI guidelines towards recovery agents: how agents should approach, the time they can visit, and how they should behave.

Approach of Recovery Agents
The RBI states: “To ensure due notice and appropriate authorization by the banks, they should inform the borrower the details of recovery agents engaged for the purpose, while forwarding default cases to the recovery agents. The details should include their telephone numbers, etc. The recovery agents should call the borrowers only from telephone numbers notified to the borrower.”
This clearly indicates that if any recovery agent approaches you without following the above guidelines you should not entertain them and if they try to harass you, you can make a complaint to the police and also to the Banking Ombudsman. The bank also has the responsibility to keep the borrower informed in case the bank has changed the recovery agent. “Where the recovery agency is changed by the bank during the recovery process, in addition to the bank notifying the borrower of the change, the new agent should carry the notice and the authorization letter along with his identity card.” - the RBI guideline states.

Time of Call
The recovery agents are allowed to call the borrower only between 7 am to 7 pm. It’s as per the Code of Bank’s Commitment to Customers which banks have to abide by. In addition, visits are strictly prohibited by the code in the case of bereavement in the family or calamitous occasions - “Inappropriate occasions such as bereavement in the family or other calamitous occasion the family would be avoided for making calls visits to collect dues.”

Behavior of Recovery Agents
The recovery agents are not allowed under any circumstances to thrash the borrower or speak indecently. If the borrower does not to want to speak to the agent, the agents have to obey. “The bank and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.” - states the RBI.

An important point here is to note that in case you have already lodged a complaint for any of your grievances, banks cannot send recovery agents for that specific issue. The RBI states “Where a grievance/complaint has been lodged, banks should not forward cases to recovery agencies till they have finally disposed of any grievance/complaint lodged by the concerned borrower.”

For some of us, who have seen the recently released movie EMI, newspaper reports about recovery agents may seem to be some sort of a controversy set to malign the profession and the banks involved. ‘Sattar’ in the movie might as well be confused with some angelic figure; falls in love with a debtor, Prerna… bye bye Prerna’s debt…

In real life, recovery gents, the process, and the very fact that you are a defaulter can be a serious pain in the posterior.

How do banks recover loans?
Banks have appointed special recovery agencies for loan recovery. These agencies could be either on contract or commission.
Some banks may start the process of loan recovery after a single defaults, other may wait for at least two such instances. The process begins with calls to the borrower. And, what follows is the field recovery process, which involves face-to-face interaction.

Are there any rules for recovery agents?
We have read countless newspaper reports about how the recovery agents come to a defaulter’s house or office at all god-forsaken hours. A bank’s representative is to contact the borrower between 7 am and 7 pm, unless one needs to visit a borrower at odd hours and occasions such as continuous irregularity in the accounts.
Agents also should avoid making calls or show up to meet the person concerned on inappropriate occasions such as mourning in the family or such other occasions for making calls/visits to collect dues.

The agents are required to carry proper identification and carry the concerned bank’s or agency’s authority letter. The agent should display the letter as and when required.

Before the recovery agent is sent across, the bank needs to have given sufficient notice (as prescribed by law) to the borrower before the filed recovery process is initiated. These are just a few of the guidelines.

Notorious Fame
What is it that the ‘agents’ are famous for?

Most agents are known to threaten people and verbally abuse and threaten the defaulters, despite bank’s directions. Some may threaten or actually use third-degree treatment on the borrowers.

Lucky, a recovery agent from Delhi told CNN-IBN in an interview that some recovery agents not only used lathis for recovery, but also their Mausers. These agents may stop a defaulter’s car on gunpoint and beat him up.

These recovery agents are not on any bank’s rolls but stand to get a hefty cut of booty they help recover.

Another recovery agent decided to take law in his hands and turned robber to recover the loan. In September 2008, in Pune, recovery agent Nitin Narayan Chavan robbed Gita Buremukla (25) of jewelry worth Rs 35,000.

This HSBC Bank recovery agent met Buremukla and informed her that there was a loan outstanding. She informed him that the person who had taken the loan no longer lived on the address, a Mr. K. Rambabu.

That didn’t satisfy the agent. The agent came back the next day to Buremukla’s house and entered it on the pretext of drinking some water. Note, recovery guidelines say that the recovery agent can’t gain forceful entry into a defaulter’s house.

Chavan locked the main door and threatened Gita with a knife and forcibly took her mangalsutra worth Rs 35,000.

Is the person who has overextended credit a candidate for sympathy if he means well? He wants to pay back the outstanding amounts against his multiple credit cards, but what if he has just been fired from his job and cannot make his multiple credit card payments? Do you castigate him, telling him that he made the bed, he must lie in it? If that is so, does your lack of sympathy extend beyond the fact that recovery agents came to his house when he wasn’t at home and threatened his wife and child?

If you are the sympathetic kind (especially if you also have been in a similar jam) would you:

1. Tell the man that recovery agents are not allowed use force on borrowers or speak indecently to him or his family?
2. Tell the man that if he doesn’t want to speak to the recovery agent, the agent has to respect his wishes and withdraw?
3. Point out to him the RBI stipulation that “The bank and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors’ family members, referees, and friends, making threatening and anonymous calls or making false and misleading representations.“?
4. Point him to the Banking Ombudsman site www.bankingombudsman.rbi.org.in where he can lodge a complaint?
5. Point out to him that his best option would be pay off the entire amount. And then give him tips on how to do it - apply for a loan against property, stocks, insurance policy, or jewelry? But that he should try his best not to go for a settlement?
6. That there are credit counseling agencies, such as ICICI bank’s Disha, that exist for the very purpose of helping people like him?
7. All of the above
8. None of the above

Here are some credit counseling agencies:

• Abhay (Bank of India), 61 A, Sadanand, 1st Floor, Above Bank of India Branch, Gokhale Road (north), Dadar (West), Mumbai- 4000 028. Call 022-24221843.
• Disha (ICICI Bank), Prince Apartments, Ground Floor, Karani Lane, Ghatkopar (West), Mumbai 4000 028. Call 65971815/86/87. Visit www.dishfc.org
• Union Mitra (Union Bank of India), Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai- 400021. Call 022-22896502.

Answers:
Correct answer - Option 7
Incorrect answer - Any other option or combination of options
So incorrect that it scares me! - Option 8

I had taken a personal loan from my father for business. I have had a good payment track record in the past but I suffered a loss in my business. We now live in a rented house and do not have any securities/insurance etc to pay the loans. This is one of the reasons why there are many cheque bounces on my account now, although I’m repaying some loans. My father recently had a paralytic attack too. We are in deep trouble and do not know what to do. Recovery agents are harassing us and sometimes threaten us. Is there anything that can be done?