TaxTMI 
TaxTMI 
2007 (2) TMI 316
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....the entrance of the multi-national banks into the country has spread the culture of credit cards, loans on an unimaginable level where rather than the rich, it is the middle class, the lower middle class and the lower class who are at the receiving end of the bonanzas promised by the banks. u Inadequate information on the credit card application, loan applications, advertisements or even while meeting the bankers in person in respect of the lending rates and hidden charges, leads to this class of people being lured into the buying of the credit cards or taking of the home loan or education loan without knowing the ramifications of non-payment and default. u The first mistake here is most definitely on the part of the bank who does not believe in educating the masses regarding the promises. Once the credit card or loan is taken and there appears a default, then the witch-hunt begins. u Now the bank is the aggressor and the public is the victim. The first step to recovery of the money due is through the so-called RECOVERY/COLLECTION AGENTS. A very dignified term used for paid recovery agents who are individual and independent contractors hired by the banks to trace the defau....
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.... true statement of account stating that it will be produced in court. This gives ample scope for manipulation. Suggestions u Chronic defaulters should mean a default of a maximum of three months if intermittent payments have been made. u It is mandatory that the banks be held vicariously liable for such acts of agents. These agents have to be identified as registered agents of the bank and should be brought directly under the purview of the RBI. u It may be useful that in view of the enormous amount of litigation pending and being filed against the banks that the recovery agents be made employees of the bank and the bank be held liable directly for all actions of such employees. u Also every statement sent by the bank should disclose clearly the rate of interest and the default interest and penalty charges separately calculated and added to the amount pending and due by the customer. u At the very first month of default, the card should automatically be terminated by the bank to prevent further use/misuse. u At the time of issuance of card itself, the issuance letter should contain every single charge being made, explained in simple terms and the penalty the cu....
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.... system has proved to be extremely productive in view of chronic and regular defaulters and customers who have a premeditated intention of cheating the bank. Such people are identified easily by the agents and produced physically before the bank who resort to all means including the local police help to force such customers to repay their dues. Reason 5. The delay in the courts and the ineffective and corrupt police structure enables the bank to seek the help of such agencies which proves to be cost effective and less cumbersome. Suggestion u Abolition of the system is not the answer but effective control over the agency by the respective banks is essential. u Even though the Reserve Bank of India guidelines permit the use of an independent agency, no prescribed qualification or licence is granted. u If there could be a guideline only licensed recovery agents would be employed and misuse of the agents as against the borrowers can be eradicated. u License also should be granted after the respective agents get through in a course conducted by the banks. u In accordance with the RBI guidelines, in any proven cases the license of the agent should be cancelled wi....
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....s score over the nationalized banks in terms of connectivity and ease in functioning, since they are highly automated and efficient. The staff too is well-trained and well-paid also. The disadvantage here is that the more the pay, the greater the pressure. Every facility is provided but work is extracted to the maximum irrespective of the age or personal circumstances. In a nationalized bank, since there is no fear of immediate removal, the attitude of the staff is tolerant. No effort is made to go a little more to help the masses. Burden is shifted easily at the lower level. The middle management and higher management are under tremendous pressure, since they are to achieve targets on par with the multinational banks. Though there is job security and comfort in pension, there is no answerability. This leads to a recalcitrant attitude and apathy. As a conclusion, one can state that though efficiency is necessary, it should not be attained under pressure and this situation would only improve if answerability is made the prime criteria in both the sectors. Additional inputs 7. Considering the difficulties of the customers as well as banks, the concept to be developed is to crea....
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....in mind the social responsibility, it is absolutely necessary to appoint a special committee who will look into the disparity in working conditions, at least up to the managerial level and make such recommendations to the RBI and Union of India for all remedial actions. 14. In conclusion, we say that we are governed by a rule of law in the country. The recovery of loans or seizure of vehicles could be done only through legal means. The banks cannot employ goondas to take possession by force. Altmas Kabir, J. - Leave granted. 15. This appeal has been filed by the Manager, ICICI Bank Ltd., against the order dated 7-12-2006 passed by the Allahabad High Court in Criminal Miscellaneous Petition No. 11210/2006 disposing of the petition with a direction upon the SSP, Allahabad, to ensure the registration of a case on the basis of Annexure VII to the writ petition and its investigation by a competent police officer. 16. Before adverting to the subject-matter of the writ petition it may be pointed out that, in the writ petition, the writ petitioner has chosen to implead as respondents, not only the Union of India and other police authorities of Uttar Pradesh but also the Preside....
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..... 1, 2, 4, 5, 6, 7 and 8 to register a First Information Report (FIR) in Civil Lines Police Station, Allahabad, against the respondent Nos. 9 to 13 and, during the period of investigation, to save the losses of the writ petitioner by recovering the truck along with all the documents relating to the truck and to hand over the same to the writ petitioner. The writ petitioner also prayed for a writ of mandamus to direct the respondent Nos. 1 and 3 to cancel the licence of ICICI bank and for other ancillary reliefs. 21. On the basis of the aforesaid writ application, the Division Bench of the Allahabad High Court while disposing of the writ petition passed the following order : "The relief sought in this writ petition is for issuance of a direction for registration of the case against the respondents. Heard learned counsel for the petitioner and the learned AGA for the State and perused the record. The contention for the learned counsel for the petitioner is that a perusal for application dated 3-9-2006 (Annexure VII) to the writ petition discloses commission of a cognizable offence. It was obligatory on the part of the police to have registered the case and to proceed with....
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....e paid off in suitable instalments. 25. On behalf of the writ petitioner/respondent, it was contended that the amount said to be due towards principal was highly inflated since according to the writ petitioner she had defaulted in making payment of the only one instalment. 26. Be that as it may, we are inclined to accept Mr. Salve's suggestion and we accordingly direct that upon deposit of a sum of Rs. 50,000 (rupees fifty thousand) only, the bank shall forthwith release to the writ petitioner or her agent the truck bearing registration No. UP-78-AN-1951 which had been seized from the writ petitioner's possession. The writ petitioner assisted by her agent, will sit with the bank officials for the purpose of reconciling the accounts and in the event it is found that the writ petitioner had not been given credit for certain payments made by her, such payments are to be taken into account and the balance principal amount will then be paid by the writ petitioner respondent to the bank in six equal monthly instalments, the last instalment being for any broken amount, if any. The writ petitioner respondent undertakes not to encumber or dispose of the truck till the final accounting....