The Reserve Bank of India (RBI) slapped a Rs 1 crore penalty on HDFC Bank for breaching recovery agent engagement requirements. The bank's recovery workers were discovered to have called consumers outside of the designated hours, invading their privacy and creating annoyance. HDFC Bank was found to have breached RBI instructions regarding the 'Recovery Agent' as well as other areas, such as 'Interest Rate on Deposits' and 'Customer Service in Banks.' The central bank's examination, which reviewed the bank's financial status as of March 31, 2022, found that HDFC Bank did not follow norms limiting client contact by recovery agents outside of the authorized hours of 7 a.m. to 7 p.m.
The event, in which HDFC Bank's recovery agents called consumers outside the permitted hours, notably after 7 p.m. and before 7 a.m., illustrates the issue of aggressive recovery practices used by some banks, which can cause harassment and anguish for borrowers. The RBI acts as a reminder to banks that they must use ethical and responsible methods while dealing with borrowers, particularly those who are experiencing financial problems.
Against this context, it's critical to understand how to defend oneself against potential harassment by recovery agents.
Right to verify the identification
As fraud cases increase, borrowers have the right to protect themselves from imposters acting as recovery agents. Before beginning any conversation concerning pending dues, request the recovery agent's ID card, validate that the ID card was provided by the bank or NBFC, ensure that the agent's information match the ID card, and confirm the agent's permission to collect dues.
Right to privacy.
Recovery agents are required by law to preserve anonymity while dealing with debt difficulties. They cannot disclose information about your debt to others or discuss it in public or with third parties.
Banks, regional rural banks, payment and small financing banks, non-bank financial institutions (NBFIs), home finance businesses, and cooperative banks are all regulated enterprises. The RBI's proposed guidelines for "Managing Risks and Code of Conduct in Outsourcing of Financial Services" emphasize that these firms and their recovery agents should not threaten or harass borrowers during debt collection, either verbally or physically. This involves public humiliation and invasion of the borrower's privacy, such as sending improper texts or making threatening phone calls.
REs and their recovery agents are not permitted to contact borrowers or guarantors before 8:00 a.m. or after 7:00 p.m. while collecting past-due loans. If you see a recovery agency infringing this right, please register a complaint with the relevant bank or NBFC. You may also pursue legal action against the agency.
Right to humane treatment
Recovery agents must adhere to a stringent code of conduct when interacting with debtors. They must be polite and respectful in their approach, respect your personal space, and contact you between 7 a.m. and 7 p.m.
If a recovery agency violates these standards, you may take legal action against them. Support your allegation with credible evidence, such as logs of unwanted calls or texts, witness accounts, and evidence of harassment or threats.
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