Pune, December 5, 2007: Credit Consumers Association of India (CCAI) has now opened a war against the banks using illegal methods of recovery; CCAI is now set to create awareness among the masses about their rights of fare practices to be adopted by lending Banks, Financial Institutes and Credit Card companies. All banks using illegal methods of recovery, including threats of physical harm, telephonic harassment, abuse of the account holder in public places and general berating of the account holder in the presence of his family and friends. Banks and their recovery agents have crossed all limits of decency and often use the foulest of language in an effort to browbeat the customer into submission. Banks are doing this essentially to subvert the normal legal process of recovery which is time consuming according to them.
Mr. Vijay Kamble, President, CCAI, while addressing the Media said “As an association representing such cases, we have represented hundreds of cases with the banks, most of them of foreign origin and private banks and sought relief for our members.”
“Our continues efforts and persuasions with law makers, government and RBI for the last few years was unheard but the few incidents of suicides and many incidents of harassment by these banks were highlighted by media and public outcry with our Morcha on RBI last week has resulted in to promise by RBI Governor to take stringent action against banks practicing unfair and illegal practices to recover their dues. Not only that even ICICI Bank has agreed to form a committee of five members from both sides to solve any problems related to recovery harassments”. he added further.
But the banks continue to use recovery agencies with musclemen to threaten their defaulters which has resulted in few suicides and destroyed many families. These actions of banks are despite of clear cut rules framed by IBA (Indian Banks Association) to which all these banks are signatories, RBI guidelines and Supreme Court directives. This clearly indicates that the banks do not care about the law of the land are taking it upon themselves to subvert the proper legal process laid as per the law.
On the one hand these banks are aggressively pursuing the common man for availing of credit facilities and that too at exorbitant rates ranging between 28% to 50% per annum under the guise of unsecured loan and on the other hand are resorting to terror tactics in the matter of recovering the same loans even when the default is due to genuine reasons. The logic these banks give for such a high rate of interest is that the default rate is very high. Thus the loan taker is actually already paying for people who are defaulting. When queried about the default rate, it has been pegged at 7 to 8% of the total lending basket. By no logic can this translate to such a high rate of interest.
1. Not disclosing the actual annual rate of interest.
2. Not disclosing to the loan taker to the fact that in case of minimum payment on credit cards, the loan will amortize negatively. That is the outstanding amount will actually increase and not decrease if the customer chooses to pay just the minimum 5% of the outstanding amount.
3. Levying irrational late fees, over credit limit charges and applying other hidden charges without the consent of the account holder.
4. Raising interest rates without consent of the account holder and not reducing them across the board when the rates fall.
5. Holding the customer responsible even is clear cases of fraud committed by some one else while using the credit card or account or identity information of the customer.
6. Not supplying the terms and conditions of the loan offer, making it difficult for the loan taker to repay before time, levying prepayment charges on early payment.
Association is now pursuing with RBI to reduce the interest rate of these banks to the international standard which is not more than 12% annually. CCAI bring to your notice the following cases were successfully fought with the Banks in recent past.
1. In the case of Mr. Prakash Sarvankar, the person had availed of a small ticket loan of Rs 50,000 from ICICI Bank. Being unable to pay the installment, the banks recovery agents drove the person to suicide. The poor man has left behind a family of 3 daughters and his widow. Our association successfully negotiated with the bank for an ex-gratia payment of 10 Lacs as fixed deposit for the widow, a 25 Lac insurance payable after 20 years to the daughters and a medical cover of Rs 5 Lacs per surviving person in the family.
2. In the case of Mr. Prashant Chavan, our member from Nashik, who was being harassed for recovery of a credit card outstanding of his late father, we have raised the issue with HDFC banks nodal officer with a copy to RBI banking ombudsman asking for specific restraint on telephonic harassment to the family of the deceased.
3. In the case of Mr. Baban Yetam, an engineer working with Air India, who has fallen into serious default due to prolonged illness of his wife who is fighting a daily battle with death, the association has asked for specific restraint from the banks and their recovery agents to provide relief to the loan taker.
It is becoming increasingly difficult to address the malaise on a daily basis and thus there exists an urgent need for creating awareness on a large scale, which could be done through media’s active participation in educating people to save many lives and families suffering from these debt recovery agencies.
For more details:
VinodKumar Chand (GS-CCAI) 9870236336- vinodchand@gmail.com
Vivek Gaikwad, 9822591379- viveksankalp@gmail.com
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