What if you default on your loan?
By Joseph Samson
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The risk of default on a loan comes hand in hand with borrowing. Default in no terms is an appreciative act and the borrower should make every effort to repay back the loan taken. However, it is not always that a person intentionally defaults on the loan taken.

Sometimes unforeseen circumstances like job loss, total or partial disability of the borrower due to accident or disease and other unanticipated emergencies are causal to default by a borrower. In such situations, the borrower should take corrective measures immediately.

The borrower should first of all consult with the concerned bank about his failure of immediate repayment. Borrowers have been facing trouble since long from the unruly behavior and attitude of recovery agents. The harassment by recovery agents have earlier led to many borrowers even give up their lives.

Even though defaulting is an offence in banking system, but few such blatantly outrageous incidents has prompted the apex regulatory body, Reserve Bank of India has set certain norms to protect the interest of borrowers.

RBI has strictly directed against any sort of physical harassment by recovery agents on borrowers. The agents have been forbidden to call the borrowers at odd hours and trouble them. In case the agents do not stop their atrocious measures, then the concerned bank will be held responsible in such a case.

The Banking Code and Standards Board of India also directs against erroneous behavior of recovery agents. It has directed banks to check the track record of recovery agents before hiring them.

In case the borrower discusses his inability to make timely repayments for genuine reasons, banks usually come up with a mid way benefitting both. If even after consultation with concerned bank, recovery agents continue pestering the borrower, he can then make a complaint to the bank. The bank has to redress the complaint within 30 days. If it does not take necessary action within this period then the borrower has the right to take the complaint ahead to banking ombudsman. Banking ombudsman however entertains a grievance only when it goes unheard from the banks' part.

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