Keep The Wolf From The Door

It’s 2 a.m. There’s a ring on the phone, a sound you’ve learnt to dread. It’s the recovery agent, again.

Unless you have been at the receiving end, it’s tough to imagine how stressful a single phone call can be. “It was the worst experience of my life,” says BPO employee Sinith Mechery, 25. “Due to some unavoidable circumstances I defaulted on a few loan repayments,” he says. A recovery agent began calling him and rudely demanded that he make an immediate payment. Mechery just hung up on him. “But he called at least 35-40 times that day and his language was abusive. I’d never had an issue with my banks prior to this, but this incident has definitely left a bad taste in my mouth,” he says.

Mechery is lucky. In a case that shocked the nation, ICICI Bank customer and Mumbai resident Prakash Sarvankar, 38, who had taken a Rs 50,000 personal loan, committed suicide last year, holding a recovery agent responsible for his death in his suicide note.

Three sides of the story. The main characters in a recovery story are the borrower, the lender and the recovery agent. While it’s easy to sympathise with the harassed individual, banks, too, have reasons for outsourcing debt recovery. Says Axis Bank chairman and CEO P.J. Nayak: “Axis Bank has an in-house collection department; we also employ reputed third-party collection agencies that comply with non-aggressive methods.”

An agent’s job, in-house or third-party, is to facilitate the process of recovery. If the borrower feels doesn’t want to deal with a recovery agent, he can approach the bank for direct negotiations. “If there are genuine reasons holding up repayment, we can work with it. For example, credit cards dues can be easily converted to an EMI, which is part payment, instead of the total outstanding due,” says Nayak.

Most banks are willing to make adjustments if the reasons for default are genuine. An HDFC Bank spokesperson says that if there is a real problem, the bank works out things as per its policy.

Recovery agents work on a commission basis and are, therefore, highly motivated to show efficiency. Arun Saxena, president, International Consumer Rights Protection Council (ICRPC) president says, “Debt recovery agents often treat borrowers in unacceptable, illegal ways. Customers should be careful about giving any money to agents; payments should be made against a proper receipt. One can even approach the National Human Rights Commission if need be.” The important thing is to not get intimidated (see Do’s and Don’ts.)

Help from the top. To protect the interests of both the borrower and the creditor in the debt recovery process, the Reserve Bank of India (RBI) has issued guidelines that a recovery agent and the bank that employs him have to honour (see The RBI’s Recovery Rules).

Based on these guidelines, earlier this month, the Supreme Court reiterated that banks cannot deploy goons for recovering loans from defaulters. “The creditors have the right to recover their dues, but there is a right way to so. Laws have to be followed, which is are not necessarily followed by many creditors,” says Mumbai-based high court lawyer Rohini Pandit.

The central bank has said it may ban a bank from engaging recovery agents in a particular area, either jurisdictional or functional, for a limited period. In case of persistent breach of its guidelines, the RBI may extend the period of the ban or the area of ban.

Better safe than sorry. All said and done, a recovery agent will come into the picture only because you slipped up. The reasons could be many: overspending, overborrowing, a personal crisis (sickness, loss of employment), or pure bad luck (a loan repayment cheque lost in the post). At the end of the day you need to take responsibility for financial indiscipline.

Lending a helping hand for this are a number of financial counselling centres that offer free service to those caught in the debt trap (see Overspenders Anonymous). Many banks alert you on payments due via SMS or email. Autopay (or direct debit) is also an easy way to avoid oversight on loan repayment cheques.

Most importantly, of course, never borrow more than you can comfortably repay. It’s basic common sense, but it’s rapidly becoming uncommon.;

Courtesy: Outlook Money


Fake Note, Real Dilemma


Picture this. You are in a tearing hurry and you pay off the taxi guy as you reach your destination. He gives you the change, which you hastily dump in your purse and rush. Off you go to a shopping mall to buy something. You pay at the counter with the notes you just got from the taxi guy. The salesperson looks at one of the notes with suspicion and gives you an eerie look. He checks the note against fluorescent blue light, smells, crushes and lick tests it. Yuck! You say in disgust. He declares it fake and asks you for another one. Standing agape, you demand he takes it. He threatens to call the police. You run for your life.

You better do! Rakesh Maria, joint police commissioner (crime), Mumbai City, says: “Possession of fake notes is an offence. One Rs 5 fake note is good enough [to be guilty of possession].” Well, now that you have a fake note in possession, you are already in trouble, technically!

The legal tangle

With revenge on your mind, you determine to palm off the note to some unsuspecting fellow. In fact, if you think of palming off the note, you are not alone. A quick dipstick survey shows 98 per cent people would do the same. But you better not do that, either. Maria says, “It is unfortunate that people palm off fake notes. Palming off a fake note knowingly is also an offence.” You definitely do not want to be caught doing that. In fact, intentionally passing on a fake currency note is a cognisable offence, which could lead to a prison term.




Cursing your fate, you decide to get rid of the bummer right away, but how? A friend who inadvertently received a fake note donated it to a temple. (Another dipstick survey at a few local religious places shows that nearly 20 per cent of donations are in form of either soiled or fake notes.) That’s too low for you to do. Having run out of options, you march to a local bank, hoping to get an exchange.

The brutal truth

A Reserve Bank of India (RBI) spokesperson says: “According to the RBI, when a customer takes a counterfeit note to a bank, the bank is supposed to impound it and give the customer an acknowledgement receipt.” After impounding the note, they will stamp it ‘Counterfeit bank note impounded’ and give you an acknowledgement receipt, even if you refuse to countersign the same. You lose your money since a fake note is never paid for but confiscated. But that’s not the end of the story.

The bank will file a First Information Report (FIR) against your name at the local police station. A copy of this FIR is sent to the Forged Banknote Vigilance Cell at the bank’s head office. The bank will be alert if you try to deposit any fake notes in the future. The police will look into the matter and carry routine investigation in order to get any further leads and zero down on the exact source. Says Maria: “Crime does not differentiate between class. Even if you are a housewife who inadvertently has a fake note, we can investigate. Once we know that there is no mens rea (criminal intent), we just make a diary entry.” Following the investigation, if you are found to be an inadvertent victim, the matter ends there. But let’s get real! Do you, even as a customer who honestly walked into a bank after being palmed off a fake note, want to face the police?

What if you are planning for studies abroad, or an employment visa? Wouldn’t an FIR in your name have a negative influence on Visa authorities? “No”, says Maria. However, a source from British consulate says “…on verification, things like these may give a wrong impression about you to visa authorities.”

Are banks remiss?

Newspapers and news channels have been reporting about ATMs dispensing fake notes. Instances of bank staff diluting authentic currency with fakes have been reported, too. Take the case of the chief cashier of a State Bank of India branch in Domariaganj, who was caught in the Rs 4 crore fake currency scam. Such instances show that even banks can be a source of fake notes these days.

A cashier in a private bank says on the condition of anonymity: “We get customers who bring in fake notes, claiming that our ATM had dispensed it, but since they can’t prove it, we are helpless to do anything about it.” Stories of banks brushing off responsibilities after dispensing fake notes via ATMs is not uncommon.

The RBI has taken initiatives to deal with the dispensing of fake notes by ATMs. It has asked banks to set up note-sorting machines at all branches. In future, ATMs might be fitted with in-built detectors for fake currency notes (read Curbing Fake Notes, 9 September 2009, Outlook Money). The apex bank has proposed to introduce plastic notes, and it’s common knowledge that improvisation in security features of the notes is an ongoing process.

Data from the RBI show that 3,98,111 counterfeit notes were detected during 2008-09 at the Reserve Bank’s offices and branches alone. It goes without saying that there are many more in circulation and the number will only increase. The best defence is to be vigilant while handling cash, especially with Rs 1,000 and Rs 500 notes (see Noteworthy). And of course, pray that you never receive a fake note again!

Read Original here.

Courtesy: Outlook Money