Private, foreign banks made greater use of loan recovery agents: FinMin
NEW DELHI, DEC. 14:
The Finance Ministry has admitted that private sector and foreign banks made greater use of agents to recover outstanding loans from customers than nationalised banks, the State Bank of India and its associate banks.
In a written reply on Friday in Lok Sabha, the Minister of State for Finance Namo Narain Meena informed that out of total of 149 complaints (received between April-November 2012), 101 were against private sector banks (72) and foreign banks (29) for use of direct selling or recovery agents.
He also informed that 116 complaints out of 149 have already been disposed of.
Meanwhile, the number of complaints has been coming down after the Reserve Bank of India issued guidelines on July 1, 2011. These guidelines define norms for recovery of loans, including vehicle loans, along with engagement and training of recovery agents and methods to be followed by them. The guidelines ask banks to avoid adoption of uncivilised, unlawful and questionable behaviour of recovery agents during the process of loan recovery.
( My comment : Government should also suggest how to deal with recalcitrant and will defaulters and what help government will help if borrowers willfully stops repayment of dues and makes effort to arrive at compromise settlement with bankers or to apply his linkages with ministers to get the loan written off completely )
( My comment : Government should also suggest how to deal with recalcitrant and will defaulters and what help government will help if borrowers willfully stops repayment of dues and makes effort to arrive at compromise settlement with bankers or to apply his linkages with ministers to get the loan written off completely )
These are applicable to all scheduled commercial banks, regional rural banks and even primary cooperative banks.
“Banks are, therefore, required to rely on legal remedies available under the relevant statutes while enforcing security interests without intervention of the courts of law,” he said.
How Government will deal with such situation and will they punish guilty judges, magistrates,officers and ministers who willfully delay the recovery of bank;s dues to serve their self interest and to earn illegal money from defaulting borrowers?
Has any minister so much courage that he or she can stop ministers building pressure on ED and CMD of a bank to sanction loans t friends, relatives and close associates of the minikster?)
BANK FRAUDS DOUBLE
In reply to another question, Meena informed that the amount involved in fraud cases in public sector banks during the first six months has exceeded the total of the last full fiscal.
It is more than double of 2010-11.
According to figures, public sector banks reported 1,714 cases of frauds involving Rs 5,210.56 crore, while in 2011-12 a total of 3,392 cases with an amount of Rs 4,025.30 crore were reported.
SUSPICIOUS DEALS
The Finance Ministry said that during April-October, 2012, various agencies reported a total of 17,204 suspicious transactions (STRs) to the Financial Intelligence Unit-India.
These are for investigations of suspected money laundering, so the amount involved can not be ascertained now, Meena said.
In a reply to a question, the Minister said Foreign Currency Convertible Bonds (FCCBs) worth Rs 2,104 crore were due for maturity this month.
This amount will be Rs 667 crore, Rs 80 crore and Rs 317 crore for January, February and March, respectively.
To prevent any default of redemption of FCCB by Indian companies, the RBI has permitted restructuring of FCCBs not involving change in conversion price under the approval route.
Further, buyback of FCCBs has been allowed under the approval route at a minimum discount of 5 per cent on the accreted value up to March 31, 2013, the answer stated.
Recovery agent threat greater from foreign, private banks
Private sector and foreign banks made greater use of agents to recover outstanding loans from customers than nationalised banks, the State Bank of India and its associate banks, the Lok Sabha was informed today.
Between July and November this year, the banking ombudsman received 101 complaints against private sector (72) and foreign banks (29) for use of direct selling or recovery agents, Minister of State for Finance Namo Narain Meena said during Question Hour.
He said 48 complaints of similar nature were received by the banking ombudsman against nationalised banks (21), SBI and its associate banks (27).
Of the total 149 complaints, received during the five-month period, 116 had been disposed of, he said without elaborating.
In 2010-11, 928 complaints were received against private sector banks, 658 against foreign banks, 52 against SBI and its associate banks and 58 against nationalised banks, he said.
However, next year there was a sharp decline in the number of complaints after the Reserve Bank of India issued guidelines asking banks to avoid adoption of uncivilised, unlawful and questionable behaviour of recovery agents during the process of loan recovery.
In 2011-12, 87 complaints were received against SBI and its associate banks, 54 against nationalised banks, 223 against private sector banks and 83 against foreign banks, he said.
The RBI guidelines, issued on July 1, 2011, are applicable to all scheduled commercial banks, regional rural banks and even primary cooperative banks, Meena said.
"Banks are, therefore, required to rely on legal remedies available under the relevant statutes while enforcing security interests without intervention of the Courts of law," he said.
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