Use of Force by Banks to Recover Loans

Hi frnds, I think that we can not say it wrong as before giving loans to it's customers bank goes through the process of knowing their capability to repay it. As instructions given by rbi in KYC norms. And if after that customers are not paying back it to banks the bank can go by force to recover it. Because it is the need of business. And if bank will not do it then everyone will try to absorb the loan without repaying it.

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.

I'm not agree with this. Because in that situation person need money from bank to start any business and they have the plan to get profit and return back the loan money to bank, but in bad situation they got loss in their business and not able to return back the money. So, bankers should give time to them. This is my thought. Because now a days many students doing their studies with bank loans. So please put trust on them and help everyone, then they will be truth to bankers.

Thank You.

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.

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.

Hello friends.

I completely disagree the statement. Banks are giving loans to people after verifying the certificates related to their income, property and for what purpose they are taking the loan, if the bank was satisfied with those documents then only the bank ll give the loan. So if the person who took the loan unable to return the money to the bank, the bank had right to sell the property of the person and fill their loan money, but they are not having the right to force the person to return the loan. Force on the person to pay the loan is violation of bank rules. So use of force by bankers is wrong statement.

Hello friends,

Your point of views are very nice. I learned a lot. In my view, the bank is having trust on public and lending the money, not only they are believing the trust they asked for proofs, if they are sufficient with collateral security. As my friends said it is not a charity right, if the loan is paid back then only again money will get circulated.

So the people who roaming like anything to get the money they should take initiative to repay the loan at the same time. It cannot be forced but people should itself think otherwise they will lose their security simple. So if is paid properly they only they will get it again. If bank it utilized in a proper way everything will be fruitful.

Banks does not have its own money to give loans they accept money from public as deposit and then lend that money to the borrower. And the deposit money is payable on demand of the customer. And at the sanctioning time of the loan bank should told every condition to the borrower. After the bank can be strict on the loan recovery. But physical force should not be applied to any borrower.

Of course banks should not use force to recover Bank's lent money. Bank has various other legal recourse to recover Banks fund. First Before sanction of the loan Bank should have assessed the repayment capacity of the borrower. Have done Due Diligence? Find out the reasons why the borrower is unable to pay. Whether he will be in a position to repay the loan or not. If not give the chance for settlement rather than using force for recovery of Bank Loan. People have trust in Banks and deposit their hard earned money. On the other side they take help from the Bank by getting loan for their needs. There are a very few borrowers who have capacity to pay but unwilling to pay a stringent action be initiated against them but within legal framework by not using the force.