The fair practices code for debt collection framed by the banks is revolved around dignity and respect to customers. The codes are outlined based on recommendations of the Working Group on Lenders’ Liability Laws constituted by the Government of India. Banks security repossession policies were aimed at recovery of dues in the event of default and not aimed at whimsical deprivation of the property.
The debt collection codes framed by the commercial banks in India are in line with regulatory or supervisory instructions of RBI, Model policy of IBA, fair practice codes and charters of BCSBI.
In terms of IBA model policy, the customer would be contacted ordinarily at the place of his/her choice and in the absence of any specified place at the place of his/her residence. If the customer is unavailable at his/her residence, he/she will be contacted at the place of business/occupation. While written communications, telephonic reminders or visits by the bank’s representatives to the borrowers place or residence will be used as loan follow up measures, the bank will not initiate any legal or other recovery measures including repossession of the security without giving due notice in writing. Banks are committed to ensure that all written and verbal communication with its borrowers will be in simple business language and will adopt civil manners for interaction with borrowers. Borrower’s requests to avoid calls at a particular time or at a particular place would be honored as far as possible
The Reserve Bank of India’s fair practice code for collection of credit cards dues states that “in regard to appointment of third party agencies for debt collection, it is essential that such agents refrain from action that could damage the integrity and reputation of the bank and that they observe strict customer confidentiality. The guidelines further state that banks 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 credit card holders’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.
In line with model policies adapted by the member banks of IBA, the Identity and authority of persons authorized to represent bank for follow up and recovery of dues would be made known to the borrowers at the first instance. The bank staff or any person authorized to represent the bank in collection of dues or/and security repossession will identify himself / herself and display the authority letter issued by the bank and upon request. Normally, the bank’s representatives are required to contact the borrower between 0700 hrs and 1900 hrs. In the specific circumstances where the customer is refusing to pay, is not contactable, is non-cooperative, disputing earlier commitments, and if they are unable to establish contact during specified calling hours, banks may contact the borrower up to 2100 hrs.
Although, in the recovery process the bank would respect privacy of its borrowers, contacting the borrower on phone or personal visits for recovery of dues cannot be construed as an intrusion of the privacy of the borrower. However, inappropriate occasions such as bereavement in the family or such other calamitous occasions will be avoided by the bank for making calls/visits to collect dues.
The bank may document the efforts made for the recovery of dues and gist of interactions with the borrowers.