The finance minister made this observation in her reply on the loans sanctioned under the MUDRA Scheme, where she said that the non-performing or bad loans of state-run banks have come down.The Reserve Bank of India has asked banks to look at formulating a standard protocol for vehicle seizures in loan default cases.
This follows representations highlighting issues faced by transporters, including forceful seizure of vehicles along with onboard cargo.
"Banks, internally, have advised their recovery teams to strictly follow all existing guidelines by the RBI on recovery procedures," said a bank executive aware of the matter, adding that the issue was also discussed last month in a meeting of key banks.
"It has been decided that through Indian Banks' Association (IBA), we will seek comments from all lenders and then examine the feasibility of formulating a standard protocol for seizure of vehicles in case of default in repayment by the borrower," he said.
An email sent to RBI did not elicit any response till press time.
Another bank executive said that often transporters and even some individuals use delay tactics like claiming cargo on board to thwart the repossession attempt by banks.
"Any repossession attempts are only made after the borrower has been served reminders and notices about pending payments," he said, adding that possession and auction for banks is also a long-drawn process, and attempts are made to resolve the bad loans by offering longer repayment periods and other support.
The government has already sensitised banks on loan recoveries and that there should be no harassment of the borrowers. In August, finance minister Nirmala Sitharaman told the Lok Sabha that the government is closely monitoring any harassment of borrowers during loan recovery and is willing to hear any cases that come up.
The finance minister made this observation in her reply on the loans sanctioned under the MUDRA Scheme, where she said that the non-performing or bad loans of state-run banks have come down.
Under existing RBI guidelines, financial institutions and their recovery agents cannot call borrowers before 8 in the morning and after 7 in the evening. The guidelines further mandate that regulated entities and their recovery agents shall 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 upon the privacy of the debtors or their guarantors' family members.
