Sponsor

Feed

Categories

Archives


Citicorp fined for using force in loan recovery




It seems to be a story that keeps on repeating itself over and over; you hear of people being harassed by loan recovery agents for repayment of loans, or of somebody’s vehicle being taken away from them anywhere where the vehicle can be found, and so on. In extreme cases, the pressure or violence of the recovery agents can lead to injury or death of the person having taken the loan. The financing company or bank having advanced the loan would take recourse to goons or musclemen and they would use or threaten force in this regard.
For the last 2-3 years, this practise has been challenged in court, and there have been a number of decisions in this regard. Here’s another substantiating the same point that a loan recovery company cannot use force for loan recovery. Since a loan agreement is a civil contract, recovery of loan amount or the assets bought against the loan also can happen only when there is a court order:

Unless a bank or a financial institution is equipped with a court order to repossess a vehicle which it has given on loan, it has no authority to go to the residence of the borrower to take away the vehicle by force. This was observed by the state consumer commission in a recent order.


Taking strong exception to the method adopted by a finance firm to recover dues in the form of a few unpaid instalments from a consumer who took the money to purchase a vehicle, the commission headed by Justice J D Kapoor directed Citicorp Finance (I) Limited to pay Rs 50,000 to one Jan Mohammad, a resident of Mehrauli, for the mental agony, harassment and public humiliation he faced. It was observed by the commission that no financier or bank had the authority to forcibly take possession of the vehicle as the loan agreement or hire purchase agreement were civil contracts and therefore had to be enforced through civil remedy. In other words, through intervention of the court.

It may be argued that the judicial system in India is slow and cases take a long time to settle; however that cannot be an argument for using force or illegal means. A company needs to act in the constraint of the law, so they need to use greater discretion when deciding loans, or they need to go in for more out-of-court settlements in such cases.




2 comments to Citicorp fined for using force in loan recovery

  • Ajay Kumar

    This is regarding loan recovery. I am working with a NBFC and in today’s market customer start thinking that finance companys can’t do anything to them if they take the loan, they now started to default intentionally. The situation is that customer now starts to threaten us. The intention has totally changed of the customers and they started willfully defaulting with the finance companys. We are in asset financing and we are providing a asset to customer that he will use that and pay us in emi’s. Now its customer responsibility to back the money with the interest. But i think its now totally changed and the market scenario towards finance company is very bad.
    I am employee of the company and its my job to bring back the money from the customer. But our legal is with customer and they helping to customer by many conditions to not reposses the vehicle. Its very bad other side we are saying that our economy is very strong and on the other part we are helping to people to become the defaulters.
    This is my request to you to kindly suggest me that how can i help my company from this market scenario. I feel very bad when customer says to us that i don’t want to pay and do whatever you want to do.
    Please help in this matter.

    Regards,

    Ajay

  • Aastha

    Dear Sir,

    I too agree with the case mentioned above. The recovery agents literally harasse the end user and use very bad language. I am a HDFC card holder and have been a regular user. I sincerely made all the payments against my usages. Six months back i lost my job and was pushed into financial crunch. i wasnt able to make any payment from july 2008. i still havent found a job for myself.
    from last month i am constantly getting calls from Mumbai against my outstanding on the card. The principal amount due on the card is Rs 22500. which i am ready to pay in three installments. But the recovery agents are not agreeing to any conditions and are badly troubling us.
    Kindly suggest how do we take the matter further.

    Regards,
    Aastha.

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>