Banks Have No Power To Hire Bouncers For Recovering Loans; Govt. Will Take Strict Action Against Banks With Bouncers

For a long time, banks have been using bouncers or “loan recovery agents” to recover loans from customers forcefully, torturing customers physically as well as mentally.

But such traumatic malpractices will no longer be in use, and the Union Minister has taken care of that.

It has been now officially declared by the Union Minister of State for Finance, that banks have no right to employ bouncers to forcefully retrieve loans from customers.

What did the minister say against banks using bouncers? Read on to know all the details! 

Banks Not Authorised to Hire Bouncers For Loan Recovery

During the Question Hour in the Lok Sabha, the Union Minister of State for Finance, Anurag Thakur has officially banned banks from using or hiring bouncers or similar personnel for retrieving loans, be it defaulters or otherwise. 

He said, “No one has any power to appoint any musclemen or bouncers for recovery of loans forcefully.”

As Thakur said, the RBI has issued certain guidelines which discuss the protocols that the banks and their officials should follow while dealing with customers who have taken loans. This set of guidelines set by the Reserve Bank of India is called the Guidelines on Fair Practices Code for Lenders.

The RBI has issued a statement that banks will be allowed to appoint loan recovery agents only after the carrying out methodic police verification and all the other formalities are carried out, and not before that.

The Guidelines on Fair Practices Code for Lenders by the RBI

The guidelines make it clear that no malpractices are to be used while recovering loans. 

Thakur also said that the circular states that banks or bank officials are prohibited from harassing customers for the purpose of retrieving loans. “Persistently bothering borrowers at odd hours, use of muscle power for recovery of loans”, and more is covered under the term harassment. 

He specified that complaints received by the RBI about misbehavior by the loan recovery agents, and violation of guidelines are being taken seriously.

The banks, if found violating the rules repeatedly, will be banned from employing recovery agents in a particular area for a particular time.

The minister also said, “In case of persistent breach of above guidelines, the RBI can also consider extending the period or the area where the bank concerned is barred from engaging recovery agents.”

What do you think about the new changes implemented by the RBI against banks using bouncers to recover their loans? Share your opinions with us in the comments section below!