Use of Force by Banks to Recover Loans
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Points to remember before you participate in this disuccsion:
- Assume, you one of the member of a real group discussion.
- Take the initiative to participate and contribute your thoughts.
- Express your positive attitude towards providing the solution.
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Ts Ranganathan said:
(Sat, May 12, 2012 09:16:47 PM)
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Use of force by banks to recover money is not only illegal but also unethical, and no body can take law into their hands.
Bank lends money collected from depositors to loanees and any default in repayment affects the money available for further lending. Hence bank need to recover the money lend and the borrowers have an obligation to repay. But sometimes there are instances beyond the control of borrowers due to which they are unable to repay and in such cases banks have to give time or reschedule the loan or can resort to lawful means.
Again banks resort to such force only in respect of small farmers but in respect of big borrowers the same banks give compromise and negotiated settlements etc. Banks should adopt a uniform approach with regard to recovery.
Banks can avoid this kind of a situation if banks at the time of granting the advance exercise more cautious approach. Many a times sanction after protracted visits by prospective customers is one of the reason for the borrower not paying in time.
Banks have got a a duty to educate its customers on the benefits of availing loans only to that extent which they can comfortably repay.
Banks have to comply with the banking codes.
If banks use force repeatedly,0ver a period of time the good borrowers may not be willing to avail loans which will ultimately affect the business of banking itself.
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Rate this: +0   -0
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Bikram Joshi said:
(Mon, Apr 23, 2012 05:39:53 PM)
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| Banks these days provide loans to its customer just without any tight information of the borrower. Thus, it creates a situation of inconvenience for them to recover it. In such situation the institute is left with with no other option other than to use some malice means. As such the money the borrower borrowed is the money of other individual in rotation basics. Therefore it has to be endowed with such power to recover it by any means. |
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Rate this: +2 -1
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Abiodun Adeyemi said:
(Fri, Apr 13, 2012 08:31:42 PM)
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The role of a bank in lending is likened to that of a BRIDGE across a river; the bank takes money from the surplus unit and give to the deficit side, this role is based on trust as the fund belongs to the public. Therefore, failure on the part of a borrower to repay a loan is a breach of public trust.
It is noteworthy to mention that the release of funds to any borrower at any point in time is a privilege as there are many others who also require the same fund and as such this should not be abused by borrowers. For purposes of sustainable trust and integrity and for economic growth, banks must ensure that every fund given out as loan must be recovered, if need be, some level of force may be applied, depending on a given situation. |
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Rate this: +4 -0
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Shefali said:
(Fri, Apr 6, 2012 03:55:08 PM)
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| No I don, t think that banks should take such a cheap measure to extract their money out. Banks first of all should carefully go through the purpose for which the customer is taking loan and if feels satisfied than only loan should be granted and moreover after granting loan if bank feels that instalments are not properly or timely coming than bank should start taking actions like timely notice or reminder to the customer, timely visit at the customer, s and gradually warning him for legal action rather than directly sending the force because it ultimately affects the reputation of the bank and hence nation's. |
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Rate this: +1 -1
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Karishma said:
(Sun, Mar 18, 2012 02:52:52 PM)
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| Yes, I agree with this statement, because if banks has a right to give loans then they have a right to recover in the best possible manner in which they can. If the person is not able to repay the loan, then he has no right to take a loan. Banks are here to lend money to help people for a particular problem, why people not understand that they are not doing a charity. |
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Rate this: +9 -3
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Firoj said:
(Fri, Mar 16, 2012 09:37:31 PM)
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| Hi Friends, according to my view bank have no right to send goons to the customer's door. Bank first check the credit of the person who is coming for loan. Only on the bases of person annual income and its others property, bank should give the loan. On the same time bank should tell all its condition regarding the loan to the costumer. Before last date bank should call the costumer and recall him about his/her loan and said to him to pay loan at the time. If any one is fail than banks should first give a legal notice to the costumer after that bank should make a case against him in court. FORCE is not the solution of such these condition. |
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Rate this: +2 -3
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Sana said:
(Mon, Feb 6, 2012 09:23:46 PM)
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| Though there are many options, using force is more viable that too for cheaters who has gone abscond. Proper customer evaluation mechanism should be in use to prevent this case at the beginning stage. Risk profiles should be created and should be cautious with customers placed under high risk category. Wat if the person with high credibility becomes bankrupt? there's no other way than to own the security pledged by the defaulter. But if it's an unsecured loan which is given on the will of the manager judging the customer's credit worthiness? The only way is to recall by force but it may have negative impacts which may make the customer to take hasty decision like ending his life. So it's up to the management to make the advance after looking at various security concerns. |
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Rate this: +4 -1
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Sanket said:
(Mon, Jan 16, 2012 07:42:27 PM)
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| Banking is also a business and no one wants to loose their money so definitely bank also never want that.Before granting loan to customer they should study its background .rather than doing it banks are advertising that they can give loans in just 5 minutes,this is where the problem starts customer feels it good and takes it without thinking how to return it.Force is not best way for recovery .They can recover it by legal ways like auction of property etc. |
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Rate this: +16 -1
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R Thapa said:
(Fri, Jan 13, 2012 08:55:18 PM)
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| I think bank should not use recovery agent, which can be avoided by carefully examine the history or the capacity of the repayment og the customer. If he seems to be unable to re pay bank should not grant any loan if granted also bank must try to recover by way of legal means and if not possible by any legal action then as a very last option he can try to recover his loan by force, but this can be avoided if bank creats a seperate cell which will examin the payment capacity of the customer before grantion the loan. |
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Rate this: +3 -1
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Deepak Tanwar said:
(Wed, Jan 11, 2012 01:51:04 AM)
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| The solution is very simple ...banks must do their homework nicely before giving loans. Forcing customers to repay the loans show that bank failed to judge the customer at the time of granting the loan. and if the customer is not repaying even if he is capable then the bank should take legal action or may get the money back forcefully. |
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Rate this: +7 -1
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Anand.G said:
(Mon, Jan 9, 2012 03:40:05 PM)
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| It is in the financial institutions' hands, whether to give loan or not to a particular persons. If it undergoes a wide analysis of the persons ability to repay the loan within a particular time then the banks can give loan with confidence. My point is to the banker's side that they should perform a feasibility study before offering loan to a particular person. |
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Rate this: +2 -1
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Devendra Sinhg said:
(Tue, Nov 1, 2011 10:05:01 AM)
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| As far as my views on force to be used to recover the loan from the borrower is not justified as at the time so payment of loan bank should follows the rules in vogue and fulfills the term and conditions of loan and it should also be ensured that the person who taking loans is capable to return the same within the stipulated period. At the last since the loan is the govt money property of the person who is unable to return the loan be auctioned and amount recovered be liquidated the loan. |
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Rate this: +1 -1
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Devendra Singh said:
(Sun, Oct 30, 2011 05:54:11 PM)
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| I think there is no matter of using force because one who is taking loan is committed to return the same but due to some unavoidable circumstances some time he may not be able to return the same within the stipulated time, but as and when he is capable to return he returns, in case he cannot return then the guaranteeing person can be asked to deposit the same. |
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Rate this: +7 -8
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Ajad said:
(Thu, Sep 29, 2011 11:08:30 AM)
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| Banks these days are selling loans like vegetables to feed the profit hungry shareholders and then using all kind of tactics like sending goons to recover the money. This is not acceptable to any society. India is a country where nearly 40% are living in extreme poverty and other 25% are just above this poverty line...They will accept any kind of loan without even considering its terms and conditions. My point is the banks must ensure the repayment capacity without exception before approving loans. This is also critical to the reputation of not just Banks but the whole financial system |
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Rate this: +14 -1
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Raj said:
(Thu, Sep 29, 2011 11:07:18 AM)
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| I think it is a way to recovery the loan money, but there are other way. The bank first try to motivate the person to get a best way to earn money and also if possible the bank should help the customer again but in another way. It may difficult to implement. |
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Rate this: +2 -3
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Nithin said:
(Wed, Sep 28, 2011 11:26:19 PM)
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| According to my opinion, a bank should recover the loan amount early as possible. Because that is public's money. The term banking means accepting the deposits from the public for the purpose of lending them in a profitable manner. So the bank act as a mediator for the public. They should have the authority to recover or collect the loan amount. But it would not be in a forcible manner. There is no need to use the force. Because the customer or the public that he have already given their asset as collateral security. They can use these for sale. The bank should have the responsibility to check the credible worthiness of the customer or check whether the customer is able to repay or not. |
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Rate this: +4 -3
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Bagaram said:
(Tue, Sep 27, 2011 12:44:10 AM)
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| I accept the fact that there is some amount of fault with the bank but people ? are they very correct in what they are doing ? If you know that you will not be able to pay the amount why do you have to get the loan. In cases where something backfires unexpectedly I can understand but there are people who deliberately get loans and avoid paying them back and the bank has to take some step as money is in stake. So the fault lies with both I'll say. The bank should act responsibly while giving loans and so should citizens applyinng for loans. |
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Rate this: +1 -2
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Deeksha said:
(Wed, Aug 31, 2011 10:26:51 PM)
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| According to my view point bank first see the worthiness of customer whether he would able to pay the loan in future or not and bank must see his/her income criteria then the bank should provide loan to the customer so that they will not have to suffer in future and they will easily get their money back and in generally if the person is not able to pay the amount then bank would recover their amount by hook or by crook. So, bank must see the capability of a person that is he able to pay the amount of loan or not? |
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Rate this: +26 -2
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Bharat Jha said:
(Tue, Aug 30, 2011 10:31:33 AM)
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If there is some problem in recovery of loan such that a person doesn't want to return the loan amount then bank has no other option than recover the loan forcefully from that person. But it must be according to rule and regulation. Means it should be done legally with help of layers and police etc.
It may help to recover the loan amount and at same time the faith of other customers will remains with the bank. |
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Rate this: +3 -3
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Aman Vishwas said:
(Fri, Aug 19, 2011 10:24:21 PM)
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| Bank has right to recover money in better manner. If they using forcible techniques it will deteriorate image of bank and people will loss confident on bank. |
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Rate this: +10 -3
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Ipsita said:
(Thu, Aug 11, 2011 01:44:02 AM)
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| Checking for credit worthiness is not enough at all times. What if I earn enough now but fall into difficult financial times during the time I am paying off a loan/due? Medical bills run into lakhs, so can a loss in business or even a job cut. I am NOT talking of INTENTIONAL defaults here. What can "good credit worthy" customers do when they fall into bad times? Credit cards etc only spiral the total dues. If a cstomer cannot pay, there are late fees, finance charges, overlimit charges, service charge etc. That is not all. There is even a service charge for adding late fee to the a/c. What can a person do in such a situation? There are no facilities where a customer can request for a period of relief from paying back loans/credit dues. I have not come across a single bank in India which has such a relief period. |
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Rate this: +7 -1
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Jay said:
(Wed, Jun 15, 2011 01:51:06 PM)
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| Yes Banks provide loans as per their obligations and targets defined. But at the same time they should check the credit worthiness of the customer before sanctioning a loan. After the loan is dispersed, the Bank's duty is to maintain communication with the customer and follow up every repayments. Still if the customer fails to repay, then the Bank should initiate proper action as per the Banks Guidelines. |
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Rate this: +6 -3
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Manasi Ghosh said:
(Mon, Jun 13, 2011 12:10:24 AM)
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| I do agree that,use of force to recover loans is not desirable banking practice.The term banking means accepting deposits from public for the purpose of lending in a profitable manner.When banks asset becomes NPA banks fails to recover it by soft skill like public notices, legal notice ,it may be permitted to use trained,skilled recovery agents with the prior permission of higher banks officials . After all its public money ,bank has every right to recover its assets. But, rampet use of recovery agents should be banned,it is not desirable in any financilal system and also crital to the brand image of the Banks.Before sanctioning of any loan Banks should analyse its creditwotiness to avoid auch type of situation. |
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Rate this: +4 -0
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Anurag said:
(Thu, May 12, 2011 01:06:28 PM)
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The bank has no right to send goons to the customer's door. The banks take collateral which is more or less same as the amount they are lending to the customer. The collateral may be the insurance policy or deposits of the customer etc so the bank always has option to confiscate these assets and recover their money.
And if the banks fail to check their customer's credibility thoroughly at the time of sanction of loan then its the bank's fault it should not harass the customer for its own fault. |
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Rate this: +19 -0
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Vineet said:
(Wed, May 11, 2011 02:50:48 PM)
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| Giving loans is an essential part of banking and recovering the dues is also very important aspect, and for the matter of fact bank do check all the documents and assess the credit worthiness of the Customer, but if still people refuse to repay with an intention to default, using a recovery agent becomes necessary. As the money that bank gives as loan is public money. |
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Rate this: +1 -2
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Naveen Sagwan said:
(Fri, Apr 22, 2011 12:45:28 PM)
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Well when we all aply for a loan Bank always check Customer Credit History,so some of my friends giving suggesion for CIBIL, But banks perform their duty in a proper way.I have been worked in Bank Collection & i saw many person who takes loan just for default.i dont know what is the problem with cust, when they need Finance they walk up to bank and when bank need their return they simply SKIP. i don't know why they walk up to their RELATIVES when they require finance.why only bank. some cust says your sales executive keep on calling for taking loan so we took ,but have u ever travel in Train , Buses, there are lots of small seller they do lot of activity to convince us to purchase their product, but we only purchase if we need it ,otherwise we ignore it.
SO now the conclusion is this if banks are proiding loan to customer when they really need then what is the problem with the customer to pay back ??????
No doubt bank always help to customer in every circumstances. But customer wil be customer his mindset is to default, customer has money to pay mob bills, electric bill,school fee, vehicle fuel, then why not for BANK ????? |
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Rate this: +8 -1
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Anil Meena said:
(Fri, Apr 22, 2011 05:18:27 AM)
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| The all discussion which given are good, but whatever discussed, it already implemented by mfi companies, they give divide the customer according to their income, according to their activity, and according to their paying capacity, so by this customer not get burden of the loan, customer fill easy to pay, this kind of amount are sufficient to invest in their activity and earn more money by invest loan in right way, it all monitor by mfi companies that's why mfi sector are so successful in India. |
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Rate this: +0 -1
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Vikas said:
(Wed, Apr 20, 2011 04:57:26 AM)
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| I agree with statement first of all bank gives the temptaion of loan to the customer, when customer trapped the loan mania, then bank send their goons to collect the rest of amount, bank sell the loan like vegetable they don't check crdit worthiness of the customer, bank should reform their policy regarding loan. |
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Rate this: +1 -1
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Gaurav Angi said:
(Thu, Mar 17, 2011 04:23:54 PM)
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| Sandeep, I agree with your point, that bank should check the credit worthiness of an loan seeker before granting them the advances. There is a agency called Credit Information Bureau India Limited (CIBIL) which provides credit history of an individual (if he is not applying for the loan or any type of credit for the first time) bank check their credit report and also ask individual for some colletral securities so that the risk of credit default could be minimized. |
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Rate this: +3 -0
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Sandeep said:
(Sun, Mar 13, 2011 02:55:00 PM)
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| Arun, I appreciate your words but think of the situation when people needs money. They are not just taking it for the comfort of their life, they are taking because they are in need. Firstly the bank should take note of the property available with the customer. If the customer don't have enough property they should not be given loan. But this is also not a solution, the bank should impose different loan interest to different customer depending on the annual income. This might solve the problem. |
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Rate this: +1 -0
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Arun said:
(Fri, Mar 11, 2011 09:54:37 AM)
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| I accept the fact that there is some amount of fault with the bank but people ??? are they very correct in what they are doing ?? If you know that you will not be able to pay the amount why do you have to get the loan . In cases where something backfires unexpectedly I can understand but there are people who deliberately get loans and avoid paying them back and the bank has to take some step as money is in stake . So the fault lies with both I'll say . The bank should act responsibly while giving loans and so should citizens applyinng for loans. |
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Rate this: +11 -1
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Gaurav said:
(Sat, Mar 5, 2011 01:22:12 PM)
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| This a very unethical practice which is being practiced by Banks nowadays to recover the loans which they have given to less credit worthy people of the society...banks should not follow this practice as it will lead to crime and it also brings inefficiencies in our financial system...so,banks should follow fair credit practices and follow the norms and guidelines give by the Apex bank regarding in giving advances and loans. |
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Rate this: +1 -1
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Ajit said:
(Sun, Feb 13, 2011 12:33:35 PM)
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| Banks these days are selling loans like vegetables to feed the profit hungry shareholders and then using all kind of tactics like sending goons to recover the money. This is not acceptable to any society. India is a country where nearly 40% are living in extreme poverty and other 25% are just above this poverty line...They will accept any kind of loan without even considering its terms and conditions. My point is the banks must ensure the repayment capacity without exception before approving loans. This is also critical to the reputation of not just Banks but the whole financial system. |
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Rate this: +3 -0
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