Friday, March 30, 2012

Know Your Rights - Loan & Credit Card Customers

How often do we read news in newspapers and websites about recovery agents from banks and credit card company's harassing customers? Quite often isnt it? With the Economy in the state it is now, a large number of people are in a bad situation. They have credit card outstanding or loans for which they are unable to repay the money.

Whenever we borrow money, it is our duty to repay it as per the borrowing agreement. If we do not, the lender has the right to take steps to recover his money. This may include possession of your property or even a formal police complaint against you. However, this does not mean that the lender can do anything they want to disturb you or your family.

As customers, we have Rights. The Banking Codes and Standards Board of India (BCSBI) has laid down a code of conduct for banks, including guidelines for the recovery of dues from customers. Banks have to make sure that they adhere to these rules. These rules are laid down in the interest of all of us "The Customers"

These guidelines are:

Guideline No. 1: The Bank has to give Sufficient Notice to the Customer

This means that, the bank is supposed to inform the borrower (Loan or credit card customer) about his dues and give him sufficient notice period for the payment. A bare minimum of 7 days has to be given to the borrower to arrange for the payments. i.e., A Letter must be sent to the customer atleast 7 days before the banks initiates any recovery proceedings against them.

Guideline No. 2: No Unwanted/Untimely calls

Just because you borrowed money from a bank, doesnt mean that they can call you anytime they wish and disturb you. A customer can be contact only between 7 AM to 7 PM. Also, during this time, any calls made by the bank must be recorded/documented. Another important point here is that, if you say that you are busy and cannot talk at some time duration during the day, the bank has to honor your request as far as possible.

Guideline No. 3: No Uncivilized Behavior

This is probably the most important guideline. The Bank Representatives or Recovery Agents are supposed to maintain civil behavior at all times. They cannot yell or use abusive language at the customer or his/her family members. They must also respect the customers privacy and must refrain from embarrassing the customer in front of others.


The customer has to right to file a police complaint if any of the bank representatives or recovery agents indulge in physical violence during the course of the recovery process.

Guideline No. 4: Customer has the right to Choose the Place where he/she is contacted

The Customer has the right to choose the place where he/she wants the bank to contact them. For ex: some people can be uncomfortable meeting with recovery agents in their residence and ask them to come to their workplace. In such a case, the bank has to honor the customers request.

If the customer has not specified any meeting place, the bank agent can go to his residence. If he/she is not available at home, the agent can go to his workplace.

Guideline No. 5: Reg. Repossession of Property

This guideline is mostly applicable in case of home loan defaults. In the case where a home loan borrower is unable to repay his dues, the bank can take possession of the property to recover any dues. However the guidelines here are:

1. The Bank must resort to repossession of property only as the last measure
2. The Bank must give a written notice to the borrower before they do so
3. The Bank must take reasonable care to ensure the safety and security of the asset they are taking into custody
4. The Borrower has the right to regain possession of their property before the bank sells it
5. The Bank must return any excess amount if any that is left after selling the property and settling their dues, to the customer

Guideline No. 6: Reg. Authorized Recovery Agents

The bank cannot just hire any random individual and send them to collect dues from customers. The list of individuals who are authorized to recover dues from customers must be made public. They must not only put up those details in their website, they must also make this information available through their bank branches.

Most importantly, any recovery agent visiting a borrower must have a valid authorization letter from the Bank and display his Identity Card prominently.


Guideline No. 7: Reg. Customer Complaints

The customer has the right to complain against any misbehavior by the recovery agents. If such a complaint is received, the bank must investigate the complaint thoroughly. If the bank fails to look into the complaint or if the customer is not satisfied with the banks response, the customer can take it up with the Banking Ombudsman.

If the recovery agent had indulged in physical intimidation, the customer can file a formal police complaint as outlined in Guideline No. 3.

As customers, it is our responsibility to know our rights and ensure the wellbeing and safety of our family and most importantly ourselves. So, we need to make sure that we understand these guidelines.

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