What does a recovery agent do?

Recently, many debt collection agencies have harassed people in order to collect on their unpaid debts. As a result, majority of people have been affected by mental illness, and some have even committed suicide due to pressure. What does a recovery agent do?

A majority of people receive threatening calls from debt collection agents for not paying debts. And these agents are not the official bank employees, they are the third-party agents outsourced to collect the unpaid dues

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

What can a defaulter do when he or she is threatened by recover agents?

File a complaint at a police station

If the creditor is using aggressive and abusive language while asking for the bank dues, you can file a formal complaint against the recovery agent. If the police refuse to file a complaint, you can approach a magistrate for the same.

Injunction suit against the bank and recovery agents

You can file a civil injunction against the recovery agent and the bank in civil court. By filing this complaint, you receive assurance that the recovery agents will not make an unsolicited visit to your home or workplace to collect the debt.

You can file a complaint with the RBI (Reserve Bank of India)

Recently, the RBI issued a few guidelines for bringing attention among the people about the recovery agent approach to the public after receiving several complaints from the public against banks and several litigation cases filed against the threat mode of recovery. Therefore, if your creditor harasses or threatens you, defaulters may contact the institution.

Defamation suit
If the debt recovery is based on erroneous information which led to the loss of your CIBIL score, then you can file a defamation suit against the bank and recovery agency.
Trespass complaint

In the event that the bank’s recovery agent enters your home or office illegally without first sending you a notice, trespass complaint can be filed against the agent for violating your rights.

Extortion complaint

If the recovery agents forcefully recovered the amount, an extortion case can be filed against them.

What should you do if the recovery agent harass you for the the debt collection?

If you or someone you know has been a victim of harassment by recovery agent, there are solutions for you. SingleDebt can help cease harassment from these agents and handle the legal side for you. We urge you not to resolve this alone as this can lead to further harassment. Contact SingleDebt on +91 961 910 3594 or fill out the form either on the home page or contact page.