What is the fair practices code for debt collection by the banks?

The fair practices code for debt collection framed by the banks is revolved around dignity and respect to customers. The codes are outlined based on recommendations of the Working Group on Lenders’ Liability Laws constituted by the Government of India. Banks security repossession policies were aimed at recovery of dues in the event of default and not aimed at whimsical deprivation of the property.

The debt collection codes framed by the commercial banks in India are in line with regulatory or supervisory instructions of RBI, Model policy of IBA, fair practice codes and charters of BCSBI.

In terms of IBA model policy, the customer would be contacted ordinarily at the place of his/her choice and in the  absence  of  any  specified  place  at  the  place  of  his/her  residence. If the customer is unavailable at his/her residence, he/she will be contacted at the place of business/occupation. Normally the bank’s representatives will contact the borrower between 0700 hrs and 1900 hrs, unless the special circumstance of his/her business or occupation requires the bank to contact at a different time. In the circumstances where the customer is refusing to pay, is not contactable, is non-cooperative, disputing earlier commitments, and  if  they are unable  to  establish  contact  during  specified  calling hours,  banks may contact the borrower  up  to  2100  hrs.
While written communications, telephonic reminders or visits by the bank’s representatives to the borrowers place or residence will be used as loan follow up measures, the bank will not initiate any legal or other recovery measures including repossession of the security without giving due notice in writing. Banks are committed to ensure  that  all  written and  verbal  communication  with its  borrowers  will  be  in  simple  business  language  and   will  adopt  civil manners for interaction with borrowers. Borrower’s requests to avoid calls at a particular time or at a particular place would be honored as far as possible

The Reserve Bank of India’s fair practice code for collection of credit cards dues states that “in regard to appointment of third party agencies for debt collection, it is essential that such agents refrain from action that could damage the integrity and reputation of the bank and that they observe strict customer confidentiality. The guidelines further state that banks and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the credit card holders’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.

In line with model policies adapted by the member banks of IBA, the Identity and  authority  of persons authorized  to  represent bank for follow  up  and recovery of  dues  would  be  made  known  to  the  borrowers  at  the  first  instance. The  bank  staff  or  any  person  authorized  to  represent  the  bank  in  collection  of dues  or/and  security  repossession  will  identify  himself  /  herself  and  display  the authority letter issued by the bank and upon request.

In the recovery process the bank would respect privacy of its borrowers, contacting the borrower on phone or personal visits for recovery of dues cannot be construed as an intrusion of the privacy of the borrower. However, inappropriate  occasions  such  as  bereavement  in  the  family  or  such  other calamitous occasions will be avoided by the bank for making calls/visits to collect dues.The  bank  may  document  the  efforts  made  for  the  recovery  of  dues  and  gist  of interactions with the borrowers.