NEWS & ADVICE : PERSONAL LOAN
Banks should set up loan recovery grievance redressal mechanism
By Neelima Shankar
Dec 4, 2007
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New Delhi: Had there been a proper mechanism of quick and satisfactory redressal of a borrower's complaint regarding loan recovery, the scenario would have certainly been a lot more better than what it is today. This fact was emphasized in the guidelines published yesterday by Reserve Bank of India (RBI) regarding loan recovery mechanism.

The apex regulator of the banking system in India, RBI has asked banks to put such a mechanism in place without any further delay. If a borrower faces any problem regarding loan recovery process or the behavior of  a loan recovery agent, he should be able to communicate this to the bank and get adequate remedy. 

Forcible snatching of collateral and other repossession methods adopted by the recovery agents were also criticized by RBI and it has asked the banks to follow legally valid repossession methods. All the steps involved in the repossession should be clearly communicated to the borrower including their implications. The draft guidelines on loan recovery agents and methods formulated by the RBI also recommends strict action in case any bank is found violating these guidelines. These operational guidelines presently will be available for adoption by all commercial banks. The issue of extending similar guidelines to NBFCs, as appropriate, is being considered separately by RBI.

Interested parties or individuals can express their  views and comments on the proposed guidelines within a period of one month from the date of publication of these guidelines. Views and comments can be  addressed to Prashant Saran, Chief General Manager-in-Charge at the following address.

12th Floor, Central Office Building,
Reserve Bank of India
Shahid Bhagat Singh Road, Fort,
Mumbai – 400 001
Fax : 022 - 22705691

The views can also be expressed via email.


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