Use of Force by Banks to Recover Loans

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.

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.

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.

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.

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.

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.

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.

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 ?????

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.

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.