In view of the rise in the number of litigations against banks for
engaging recovery agents in the recent past, it is felt that the
adverse publicity could result in serious reputational risk for
the banking sector as a whole, RBI said on Tuesday.
An urgent need has, therefore, arisen to review the policy,
practice, procedure involved in the engagement of recovery agents
by banks in India. Accordingly, banks are urged to follow
prescribed specific considerations while engaging recovery agents.
In its mid-term review of the Mid-Term Review of the Annual
Monetary Policy Statement, RBI said, "Complaints received by the
Reserve Bank regarding abusive practices followed by a bank's
recovery agents would invite serious supervisory disapproval.
The Reserve Bank would consider imposing a temporary ban (or even a
permanent ban in case of persistent abusive practices) for
engaging recovery agents on those banks where strictures have been
passed/penalties have been imposed by a High Court/Supreme Court
or against its Directors/Officers with regard to the abusive
practices followed by their recovery agents.
An operational circular in this regard would be issued by November 15, 2007."
October 30, 2007
Banks face ban on engaging recovery agents
Here's another article with similar theme.
Banks warned against abusive practices by recovery agents