Draft Guidelines for Recovery Agents

Reserve Bank of India has just issued some draft guidelines for recovery agents to help the bank recover losses from customers who have begun to default on their credits. The recovery agents have to go through 100 hours of training, call the borrower by telephone to notify the borrower about their current status, and offer a recovery process to help the customer. They are also supposed to be considerate, lawful, and on their best behaviour regarding the collections process. The banks must follow the codes pertaining to collection of dues.

In recent years even companies with bad credit credit cards have been using abusive practices to where the supreme or high court has had to rule on the behaviour and fine certain companies for their practices. It seems that the new guidelines are to help stop this behaviour towards customers and offer solutions for the defaulted loans with the bad credit credit cards.

Of course the guidelines don’t just apply to banks that have credit cards. The guidelines are also going to apply to any bank that has mortgages. They are trying to ensure that the banks follow the guidelines for unquestionable practices to save themselves fees and the potential loss of a customer who is struggling with bankruptcy.

Part of the guidelines for recovery agents working for banks with bad credit credit cards is to avoid adverse publicity that will make the banking sector into even more risk. They are trying to help the banks survive in that they want to ban abusive practices in collections to make the publicity more favourable and encourage consumers to work with the banks rather than filing for a suit themselves against the banks.

The banks are supposed to engage in specific aspects even for bad credit credit cards such as due diligence in the process, due notice, and to understand the borrowers grievances before launching into an attack. There are of course certain points in mortgages or other loans where the bank will have to seize the property. When a person has defaulted and gone through the proper process with the bank in the lawful manner there will then be a process for repossession. The same can be said for bad credit credit cards. Once the process has been started and the consumer is unable to comply with the methods offered the credit card can be cancelled and the collection process can be started to regain the funds they have lost.

If the guidelines have been violated a consumer is allowed to file a complaint with the Reserve Bank. The case will be looked into and in most cases a court case will be started to understand both sides of the issue. If the guidelines are not followed by the banks there can be serious fines placed on the company. The Reserve Bank also has the right to extend the ban on usual collection practices or to life the ban in particular areas. It will depend on the type of collections the banks are dealing with and whether issues have been resolved.

Back To Financial News December 2007

All About Prepaid Credit Cards
4.4 Million Still Paying for Last Christmas
Higher Credit Card Fees for UK Customers
September Sees UK Credit Cards Holding
Ways to Avoid Overspending at Christmas
What Factors Come In To Play When You Apply for a Credit Card
Draft Guidelines for Recovery Agents
Opt For Debt Consolidation
Adverse Borrowers Need to Act Now