What with the credit-culture and loan-mania spreading like excruciating rashes amongst the burgeoning Indian middle-class. ?

Classified under the RBI Guidelines on Fair Practice Code for Lenders, RBI stipulates that the lending entity should not harass the borrower during the recovery process in any which way. Also that the agents (a dignified term for the ‘goondas’ – hooligans – who badger up customers) hired by these lenders should not resort to harassment of any kind including verbal or physical abuse in collection efforts. Easier said than done, eh?

Indian banks, on their part, should necessarily adopt the internationally adhered method of credit counselling, that is, the banks should provide financial education to the common retail consumer on techniques to declare and handle incumbent insolvency. And in borderline cases, should train the borrower about methods to take pre-emptive steps in personal debt management. Sadly for the retail borrower, the knowledge of banking regulations or past judgements counts only for hollow comfort. When in doubt, follow the banking rule; you can’t run, but you can hide. Hide the vehicle, and run to the court. But always remember, you defaulted, and you have to pay.

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Source : IIPM Editorial, 2006

An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative

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