Use of Force by Banks to Recover Loans

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.

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.

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.

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.

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.

Banks do go through a proper assessment of the borrower for his capacity to repay the loan on time. The conduct of the repayment history is very easy as long as the repayment is on time; In case of a sudden change the first thing would be to asses the reason; That is distinction should be made between a wilful & a genuine default.

The officials are competent enough to analyse any situation. Any decision for recovery of loan should be programmed accordingly and the BANKS should feel obliged to help the genuine defaulters by providing maximum sustained support to the needs in keeping with the gravity of the situation.

The intention of the borrower can should be scanned extensively and the genuine defaulters do need full support of the BANK to help them come out of the crisis in the best possible manner. It would be seen as a great service to the fellow country men.

Hi,

I am Akash. I think that the use of force by banks to recover loans should be according to the economical status of the victims. The use of force by banks in a developing country like India cannot be accepted because there are more than 10000 poor families living here. The government can change this by setting a limit. The families which have an annual income more than the limit should pay the loan at the right time else force can be used to recover the loan. For the poor once the loan can be taken from their income after their essential incomes. If the bank thinks this will damage their economical system, they should check the background of the family before giving loan.

To recover the dues of Bank-In Govt Sponsored Scheme, the concerned Govt Dept, Who has forwarded the Loan Application to Bank should be Direct liable for Recovery And Monitoring the project and Target Should be abolished and in general Loan Schemes, security will be Mortgage And authority delivered to the Banker to sale the captioned Security in case of repayment default.

According to my opinion, a bank should recover the loan amount early as possible. Because that is public's money. The term banking means accepting the deposits from the public for the purpose of lending them in a profitable manner. So the bank act as a mediator for the public. They should have the authority to recover or collect the loan amount. But it would not be in a forcible manner. There is no need to use the force. Because the customer or the public that he have already given their asset as collateral security. They can use these for sale. The bank should have the responsibility to check the credible worthiness of the customer or check whether the customer is able to repay or not.