Use of Force by Banks to Recover Loans

Day by day bank's Non-Performing Assets (NPA) are growing drastically. NPAs are the assets which cease income to the banks for a period of more than 90 days. This is mainly due to the ineffectiveness of management. Because, even though some people have the capacity to repay the loan amount they are not doing that, which we call it as willful default in these days.

Before banks giving loans to the customers, they have to check the creditworthiness of the borrower and his history of borrowing and history of repayment of his loan amount and even if the credit history of the borrower is good they have to take the possession or property of the borrower, which gives the same value of loan amount as a security and if borrower unable to pay the loan amount bank should take the rights over the property to recover their loan amount but some people are really unable to pay their loan amount, particularly farmers. They take loans for their crops, but these mainly dependent on monsoons and due to the insufficient rainfall their crops are failing. Due to this reason, they are unable to pay their loan amount causing to make suicides. For this reason, Government came forward to waive their loan amounts.

Banks should also recover their loans as early as possible before it goes to non-performing asset stage. So before it's going to NPA stage of more than 90 days, it has to categorise the persons who have to give the loan amount i.e. who are not paying either principal or interest there on both as stages such 30 days, 60 days and 90 days. If a person not giving amount up to 60 days then banks have to use force from 61st day to recover their loans. It would be simple and easy way.

Hi all it seems that all here do not understand that in a Democracy, the money of the State/ Country is that of the Nation. A lot of people have mentioned in their response that the Banks give money or loans against the deposits they have. I am sorry but the RIB gives them the money and some banks have investors who are Black money Income group people who fund banks and Financial Institutes to give loans.

And why should banks need collateral security. If someone was poor or weak financially then why does the State not help him. Banks are just a medium for the financial distribution and accumulation/ deposits. Now big corporate are given Huge concessions in Tax Payments which are not known to the common public and these tax reliefs to Corporate are at times nearly the Budget of this Motherland so if there are people here who are discussing of what and how the banks should function are wasting their time.

And yes prior to Independence which people were rich, and after Independence the property of these people should have been the Property of India why is it yet with them. And why is there no economic freedom like that in some progressed Countries of this world. So stop this nonsense and try to raise your voice for Economic and Financial freedom and equality, where the Government has to strife either to give proper jobs to all or then they have to support people financially to get self employed and become entrepreneurs.

If these politicians who form the Government Cannot provide the masses with Food, Shelter and Clothing and an income source either a good job or a Financial support for business they should not govern and should resign.

The use of force by the banks to recover debts from the defaulting debtors is nothing but collecting money through violence. And, any resort to violence is a crime prohibited by the laws of the land. Do the Banking Regulation Act and the allied legislation provide for such course of action to protect the banking industry? If not, the banks resorting to this kind of practice are certainly doing illegal acts that must not be allowed to go without impunity.

The logic behind such course of action cannot be endured even on economic grounds why the banks should move ahead recklessly with the depositor's moneys to dump them into unworthy hands? Why would they not arrange for adequate security against the loans they extend to risky ventures? They must remember that they stand in a fiduciary relationship with their depositors and thus stand as trustees of the properties of the latter. And no rational depositor expects that his or her banker applies violence to guard his or deposits.

The present picture reminds one of the facts and legends of the moneylenders who used to ravage the lives of the masses in the countryside during the earlier days although many instances are sometimes reported even these days. How one can forget in this context the unforgettable Shylock of the drama The Merchant of Venice by Shakespeare, the Great who made usury an art by resorting to cruelty. One may even be amazed at the sobriety of the kabuliwallas i.e. the Afhgan moneylenders vis-a-vis the rowdiness of the so-called 'modern' bankers.

All of you who are criticizing banks for their stringent action towards defaulters. Can you please imagine going to a bank for breaking your fixed deposit or withdrawing from your savings account, and the banker says that we don't have money to repay you, since your money which we lent to a borrower, is not in a position to repay.

How you will feel? Rightly said by someone amongst you that bank is just an intermediary, which accepts deposits for the purpose of lending. And unless the borrower repays the loan back, how a bank is supposed to repay its depositors? Almost all the borrowers, who claim that they don't have the money to repay their loan, when someone in their family has to get married or someone falls sick, how they arrange money for those things?only because they find those things important.


And since they don't consider repaying their loans important, they are not able to arrange money for it. Are banks supposed to keep running from door to door for recovering their loans? someone suggested that there are legal courses of action available. And of course that takes time. So are you ready to get money of your matured deposit after five or ten years of its maturity, since the amount is stuck somewhere else? Its very easy to talk about system and procedure, but when we are at the receiving end, we ourselves don't remember that any such thing actually exists.

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.

Hi Friends.

The changes that happen in today's market is unheard before a good business can become a nightmare in no time. No one worth his slat wants a negative CIBIL record in today's world. It is a pen secret that bank lends loan based on previous experience and market standings too. When something goes wrong it is not only the person who took it but also his entire family and staff too suffer. If the banks support in such a scenario, the defaulter can focus in getting back to track. Many times, goons & abusive elements who don't understand anything but their own welfare (By getting a cut out of the recovered money) harass forcing people to suffer in silence. Yes losing a property to the bank is fine, but losing one dignity can not be compensated. The question is "does the bank employee similar tactics to big business, say Vijaya Mallayya? or in that case a strong political - business entity. The answer is "NO". Big defaulters are respected where else small, society fearing individuals are threatened, abused & often insulted. Yes, banks money must be recovered under the law of the land and using strong-arm tactics should be stopped at any cost.

Financing is dharma of Banks. All banks, generally, do carry out proper pre-sanction appraisal in all cases. In retail loans, I admit that existing income level is assessed on the basis of income tax returns. But in case of business finance, banks depend on management's worth, expertise, market reports, future business projections etc.

All these parameters are properly appraised before according sanction to a proposal. Risk is assessed and accordingly pricing and litigants are proposed. Accounts go bad many a times. This is business. Banks give sufficient time, restructures too for assisting the borrowers. The problem of NPA, has become uncontrollable.

Stricter rules and regulations are the need of the day. Recovery atmosphere is polluted many times by the political interference. The recovery responsibility of Government sponsored schematic finances should be of government authorities.

It is not correct to say that simple and honest persons are troubled by banks, especially, nationalized banks. Subsidies should be linked with timely repayments. Banks, the spinal chord of the economy, of the country should enjoy autonomy in true sense.

Our country is very much facing unemployment problems and a large section of educated unemployed youths are to set themselves with the help of bank's loans which could never be advanced except the collateral security either mortgage of property of his dwelling house in the name of aged parents only to his son for employed. But if the loans are default after couple of years for market crises and other various reason and the defaulter loaner always try establish himself for setting up but yet the unit is forced to close and bank tries to recover the money by sale procedure of the only dwelling house without offering any settlement procedure or if the bank agrees always breaks commitment and always harass the party without any offer and try to disclose open place of this security. This type of cases are occurring whereas the big amount dues in the big and rich persons with wilful defaulter are getting golden opportunity with halfe portion of dues amount. This is the scenario we are observing today. How can we judge it for better world in all concerns where most of the common people always threatening at present with various discrimination.

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 ?????

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 applying for 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.