Use of Force by Banks to Recover Loans

The bank has no right to send goons to the customer's door. The banks take collateral which is more and 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.

Banks should not use force to recover the loans. Govt of India and rbi both trying hard for financial inclusion in rural India. In this scenario, if coercive repayment methods are applied people not only will stay away from organised banking sector but they will fall prey of money lenders. But then also there are big corporate giants and individuals who default willfully. And banks have no strict method to mitigate this pain. In that case name and shame is a good try but many a time such as Vijay Malaya case. He is not afraid of shame Moreover, he blatantly lives his life in a far away country and banks are tied hand. Most of the times big defaulters go unchecked and small borrowers bear the brunt of the banks. So in a sensitive country like India banks in tandem with govt should identify the defaulters judiciously and make no wrong decision to punish helpless poor borrowers. Using force is not the end of the solution but checking on accounts keep vigilant of the repayment capacities and taking care of routine follow ups is the best way to avoid defaults in future.

This is true that bank should verify all data before giving loan, and bank actually does it. But there are many people who provides wrong information and after giving loan, they not even think about to repay the loan. For these kinds of people, bank should surely take strict action.

But many of people who all are not in condition to repay the loan, as they are in crisis, not having money. So according to my view, before taking strict actions, bank should find out what is the reason behind not repaying the loan. Bank has power to take money back and has responsibility to provide loan to others also.

In my opinion it is not good to use force to recover the loan because its not necessary that every person who is not paying his installment is cheating with bank there may some serious problem with that or maybe he or she is suffering from a big loss in their business in which they invest their loan amount. I am not saying that bank always should not use the force but first bank should come to the reason why he or she is not paying his or her installment after that if reason is not acceptable then it can use force to recover the loan.

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

As per my opinion bank should try to know that why customer are not able to pay and what are the reason. If customer have some financial problem than they should make EMI accordingly to recover lone amount because they have given lone on interest and its is very high.

Hi friends.

Banks provide loans to help people in their bad financial conditions but if people will not pay back than banks need to hold a bid to get back their money. This is only option but using force is not good option because India is a developing country and anything like using force make a bad impression on people and threat others to stay away from taking loans.

Banks requiring to use force to recover loans is an indicator that its credit appraisal process is faulty. It is not continuously monitoring the lender if the funds are being used for the specified purpose. So, it is better to improve their credit appraisal process than to resort to violent activities to recover loan, which is also prohibited by law.

Even if one defaults they can always approach the court and go by the legal route.

Usha Limited with an outstanding of Rs 8,619 core.

LLOYD STEELS Renamed as Uttam Value Steel with an outstanding of Rs 9,478 crore.

HINDUSTAN CABLES with an outstanding of Rs 3,929 crore.

ZOOM DEVELOPERS with an outstanding of Rs 3843 crore.

PRAKASH INDUSTRIES with an outstanding of Rs 3,665 crore.

CRANES SOFTWARE INTERNATIONAL with an outstanding of Rs 3580 crore.

KINGFISHER AIRLINES with an outstanding of Rs 3259 crore.

MALVIKA STEEL with an outstanding of Rs 3057 crore.

What are the banks doing for this? Why only use force on the poor?

Banks who will be using forcible method to recover a loan might create a very bad impression over other people who observes the whole scenario while some random guys are trying to recover debts forcefully. P=People who could be a prospect client in future of the same bank may change their mind watching and hearing about such demeaning act.

We all know that Generosity and Hospitality is making an entrance in the banks over the years and image rebuilding is kept on a priority. Hiring local mob and granting them to authority to use force will only result in atrocity. Banks should rather check the costumers credibility of repaying loan and take collateral to bear the losses if in case the costumer fails to pay it back.