Use of Force by Banks to Recover Loans

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.

Today banks are providing loan like it is an primary function of this. He has to understand this that this function is also an harmful function of it. Regarding to recovery of loans I use to say that if banks mortgagee property then why it don't go legal activity because if bank give service then it has right to go legal. For recovering its assets.

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.

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.

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.

Acording to RBI (RESERVE BANK OF INDIA) guide lines use of force to recover loan is not legal. All the banks will survive on people trust, so if the trust is ruins then how banks can do thier business and that will create black mark on banks and people trust, after all banks depends on trust, Before the disbursement of loan to any person doing KYC (Know Your Customers) is mandatory by RBI.

Secondly proper verification should be there, the person who has applied for the loan, banks officials should check eligibility criteria and potential and meet the person direcrly for certain clarification. Banks also do need to send a intimation to the concern person before the premium.

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.

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.

HELLO,

Myself completely disagree with the statement. Use of force to recover loan is false statement. Because banker can apply force to main on farmers and small business owners.

1. For above category are always willing to pay the all loan amount regularly if no unforeseen things happen.

2. But for the case of big business man and millionairess never pay loans. So many examples are there.

I conclude that only bank can take documentation perfect that payout period completed then recover by law should be clear.

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.