Use of Force by Banks to Recover Loans

Can one tell me when a loan is given in good faith without documentation & payment done by cheque how make that person to sign the documents and what is to be mentioned in it.

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.

I do agree that,use of force to recover loans is not desirable banking practice.The term banking means accepting deposits from public for the purpose of lending in a profitable manner.When banks asset becomes NPA banks fails to recover it by soft skill like public notices, legal notice ,it may be permitted to use trained,skilled recovery agents with the prior permission of higher banks officials . After all its public money ,bank has every right to recover its assets. But, rampet use of recovery agents should be banned,it is not desirable in any financilal system and also crital to the brand image of the Banks.Before sanctioning of any loan Banks should analyse its creditwotiness to avoid auch type of situation.

Dear Reader,

There is a provision of law in India for taking debt from the bank, if someone fails to deposit the debt then that person is liable for that, the bank should know why he is unable to pay their installment. Then the bank recovers it timely by the person as person problems, if he is avoiding and pretending deposit the money then the bank force it to deposit the money.

No, they should not do as.

If there is a time limit and after that, they are not paying the loan they should make EMI accordingly.

Arun, I appreciate your words but think of the situation when people needs money. They are not just taking it for the comfort of their life, they are taking because they are in need. Firstly the bank should take note of the property available with the customer. If the customer don't have enough property they should not be given loan. But this is also not a solution, the bank should impose different loan interest to different customer depending on the annual income. This might solve the problem.

Sandeep, I agree with your point, that bank should check the credit worthiness of an loan seeker before granting them the advances. There is a agency called Credit Information Bureau India Limited (CIBIL) which provides credit history of an individual (if he is not applying for the loan or any type of credit for the first time) bank check their credit report and also ask individual for some colletral securities so that the risk of credit default could be minimized.

First of all the financing should be prudent. There is no scope for the banks to use force, but for willful defaulters the Legal remedies should be enforced strictly and timely to recover the public money.

There are people enjoying the bank loans without repaying, despite having means to repay, there the tools available to the banks should be used "efficiently" and professionally.

Right now in Bangladesh there are a lot of banks and financial institution are playing in the same fields. Every banks or financial institutions has set high target in terms of disbursement or profit maximization. The high target set is the main problem from the banks or FIs side. To maintain this, the officials of the these institutions make unhealthy competition in the market. For example- "X" Bank disbursed a certain amount of loan to a particular good customer with high creditworthiness. But the "Y" bank approach to the same customer I will be you loan just double of the "X" bank and You need not to liquidate the loan of bank "X" loan.

In that case, the borrower cannot properly use the fund or somehow get the scope to divert the fund because his/her business doesn't require excess fund. In that case he/she can not maintain or repay both the bank loan installments properly because the business is not generating the expected cash flow.

So I will emphasized on the relationship banking (Customer-bank) activities besides high credit worthiness of the customer. Relationship banking can prevent default of the loan.

Through the.

All discussions in my opinion bank before going to give a loan ask a security for that person or ask a surety. Maybe He does not have any property but he knows some person to sign as a surety.

That is very easy to both bank and customer. Because bank rule is same as to everyone.

Bank give a loan from customers money so bank have a need to repay the customers money back and bank can't say the reason of loanly people late to give the customers money. For that bank have a permission to repay the loan by violent activities when at a critical condition.