What does a recovery agent do?

Here are the few instances where people were harassed by the debt collection agents for the collection of debts.

• An 81-year-old lady was severely harassed by recovery agents as she received 375 threatening calls regarding her son’s unpaid bank dues.
• According to reports, a private bus was stopped in the middle of the road and 42 passengers were held hostage for three hours by recovery agents who wanted to recover money from the travel company that owned the bus.
• A student’s body was found on the railway tracks in Madhya Pradesh after he took loans from 15 apps and was harassed by recovery agents for his overdue payments. 

In India, there are several such incidents where recovery agents have feared people because of these incidents.

Let us understand what does a recovery agent do?

Recovery agencies or the agents are people who pursue the debt owed by customers and businesses for banks or financial institutions. Most of these recovery agents act like officials to collect the dues from the customers for a fee or a percentage of the total money owed. These are generally third-party agencies as they are not part of the original contract.

There are many instances of the high-handed and illegal behaviour of recovery agents, who were trying to recover amounts on behalf of banks.

Besides humiliation on individual calls, debtors also face intimidation and physical threats in front of family and friends. There have been many cases where the customers have developed health problems due to the arrogant behaviour of the recovery agents.

According to officials, India is an independent and recognized country with various laws. Therefore, involving muscle men in the recovery of bank dues will undoubtedly result in lawlessness in the country.

The usage of strong-arm strategies used by the recovery agent is unlawful, unethical and against the protection of the public interest, in addition to being opposed to public policy.

What a recovery agent can’t do?

Due to the economic downturn, many people have taken out loans from banks recently. However, this left them in a situation of either missing out on the payment or repaying their debts. If they have made negligence in making the payment, the recovery agent recovers the unpaid loan from them on behalf of the banks. The collection of debts from defaulters should, however, be conducted in an appropriate manner without any irregular practices.

The RBI (Reserve Bank of India) has listed a few guidelines on the action taken against the recovery agents to give closure to the public and spread awareness about this irregular practice.

These guidelines regarding recovery agents were as follows:

• If a bank is hiring a recovery agency or an agent for the collection of debts, they should ensure that they should have pre-employment police verification.
• They should have official identification provided by the banks
• Prior to visiting the debtor in order to collect the debt, they must send a notice to them. 
• It is compulsory for the bank to update the status or the name of the recovery agency on their official website.
• If you face any abusive harassment or threatening from the recovery agent, you can file a complaint against the bank with the RBI.

RBI can ban or terminate the recovery agent, imposing heavy penalties and giving benefits to the harassed debtors