Professional Documents
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Abstract:
Issues:
Criticisms
Coca-Cola's Response
When pleadings and requests failed to control the crowd, the organizers had to
threaten the children with the cancellation of the match to send them back to their
seats. Even then, when the match began, a ring of people stayed on the field,
surrounding the pitch, obstructing the view of the people who returned to the stands
The organizers and the security people were helpless, as they did not want to
physically force the children off the field. By 5 p.m. many disappointed people left
the stadium saying, "We can't see anything, what's the point?" Observers remarked
that judging by the number of people who were there in the first place, the stadium
was still probably full, even when half the crowd had left.
The crowd eventually settled down and the second half of the match went well. The
cartoon characters entertained and delighted the crowds with their antics. This
overwhelming response to the tournament was beyond even Cartoon Network's
expectations.
Tactics to Recover Banks Loans in India
Raises Ethical Concerns
In September 2007, Prakash Sarvankar, a customer of India's second largest bank,
ICICI Bank, committed suicide after being publicly humiliated by the bank's loan
recovery agents. ICICI Bank was compelled to pay Rs. 1 million in the form of a
fixed deposit as compensation to the victim's family. In a similar incident, another
customer Yadaiah from Hyderabad died of a cardiac arrest after the recovery agents
forcibly tried to recover a personal loan of Rs. 15,000 from him. ICICI Bank ended up
paying a compensation of Rs. 0.3 million to the victim's family.
In November 2007, the Delhi State Consumer Dispute Redressal Commission fined
ICICI Bank Rs. 5.5 million after ICICI Bank's recovery agents hired goondas to
recover their loan amounts.
These were not isolated incidents. There were many other reports of customers being
harassed by recovery agents of other banks and financial institutions as well. For
instance, in September 2007, a manager of Housing Development Finance
Corporation (HDFC) Bank and two of its recovery agents were arrested for extortion
and threatening a customer for recovery of a loan.
It was alleged that the recovery agents commissioned by banks often resorted to high-
handed tactics such as verbal and physical abuse, threatening phone calls, and public
humiliation of customers to recover loans. There were also allegations of recovery
agents seizing vehicles of loan defaulters illegally and kidnapping and torturing of
defaulters.
These incidents provoked an outcry against banks, with customers, the public, and
policy markers clamouring to put an end to this unethical practice.
Customers alleged that the growing competition among the banks had prompted their
sales force to hard sell personal and vehicle loans and other financial products, but the
very same banks adopted unethical methods when it came to recovery of loans in
cases of default.
On the other hand, banks justified the use of external agents for recovery of loans.
According to B Madhivanan (Madhivanan), Head, Customer Service, ICICI, "When
customers give false information like a wrong address or misleading employment
information and when their cheques bounce, we ask for the help of a collection
agency."
According to Madhivanan, it was not easy for banks to deal with defaulting borrowers
who somewhere down the line stopped repaying their loans.
"You have to listen to some of the recordings of our telephonic conversations with
loan defaulters. They challenge us to do anything we want to and threaten us, saying
that they are going to lodge false harassment cases against us," he added.
However, analysts felt that whatever be the provocation, banks should abide by the
law of the land and not resort to uncivilized behavior to recover their loans.
The various incidents involving recovery agents also attracted the attention of the
regulators. In February 2007, the Supreme Court (SC) of India expressed concern that
the banks were not adhering to the rules framed by the Reserve Bank of India (RBI)
and the Indian Banks Association (IBA).
RBI's guidelines stated that recovery agents could not resort to "harassment of any
kind, either verbal or physical, against any person in their debt collection efforts,
including acts intended to humiliate publicly or intrude the privacy of the credit card
holders' family members, referees and friends, making threatening and anonymous
calls or making false and misleading representations."
But ICICI Bank contended that the RBI guidelines provided for the employment of
agents by commercial banks for recovery of loans and seizure of vehicles in case of
payment defaulting.
With RBI's regulations being routinely flouted, in October 2007 the apex bank
expressed concern that the unlawful tactics adopted by banks would adversely affect
the reputation of the banking sector in general. Subsequently on November 30, 2007,
RBI issued fresh guidelines for banks.
The guidelines provided for mechanisms to be followed by banks for loan recovery
and hiring and training of recovery agents. As per the guidelines, before forwarding
the cases of the defaulting party to recovery agents, banks had to provide the details of
the agents including telephone numbers to borrowers, and the agents were required to
call defaulters only from those telephone numbers.
In addition to this, the RBI censured banks for offering high incentives or setting rigid
targets for recovery agents, which encouraged agents to use physical force and
indulge in questionable behavior while recovering loans.
In the same month, the working group at IBA too announced its plans to set up a fast-
track court based on the lines of Lok Adalat. The loan recovery forum would expedite
the process of recovery of loans and vehicles in a legal manner. Approving the
concept of such forum for loan recovery, RBI requested IBA to start a certificate
course in affiliation with the Indian Institute of Banking and Finance (IIBF) for
providing training to recovery agents and marketing agents for loan recovery.
RBI also issued a warning to the banks that in case of any incident of high-
handedness reported in the future or further noncompliance of the RBI guidelines, a
temporary or permanent ban would be imposed on the concerned banks.
News Article:
ICICI Bank has given a compensation of Rs.15 lakhs to the families of two borrowers
who died in recent weeks after ICICI Bank's recovery agents allegedly harassed them
for the recovery of personal loans taken by them.
Last year, in July 2006, Himanshu Dev Sharma, a fast food owner from Delhi
committed suicide after alleged harassment by ICICI's recovery agents.
Prakash Sarvankar, the ICICI loan customer who committed suicide wrote in his
suicide note that the humiliation caused to him by ICICI's recovery agents in the
presence of his wife and daughters was driving him to kill himself. The suicide note
stated that he was humiliated, abused and threatened by the recovery agents of ICICI.
Jadhav has taken a serious view of the case and has asked for all the details relating to
it in his office. D N Jadhav said the case was on his priority list. Four persons have
been arrested so far, including an ICICI Bank employee and Mumbai police
commissioner D N Jadhav said they will be questioned to know who asked them to
use power and humiliate customers in their houses. D N Jadhav said no one has the
right to harass, threaten, use power or humiliate someone to recover money and said
they would deal strictly with those who take law into their own hands.
Rakesh Maria told the bank representatives that if banks needed to make any
recoveries from anyone, they should do it legally by first sending a notice to the
defaulter, followed by a reminder. If, despite this, the person remained a defaulter,
then the bank should proceed to attach the property of the defaulter after taking
permission from the court. "During this procedure, if banks need any help from the
police they can approach us and we will help them", promised Maria.
The police commissioner also laid emphasis on checking the antecedents of recovery
agents before appointing them. “If an agent is recruited by a bank despite having a
criminal record, then action will be taken against the bank,” Maria warned. Deputy
chief minister and home minister RR Patil said the government had taken serious note
of financial institutions engaging musclemen to recover loans from citizens. RR Patil
said they would not only take stern action against agents but also against managing
directors and senior officials heading such financial institution. He promised strong
punishment for bankers who used forceful methods, intimidation or physical abuse.