RBI advises Bankers to give last chance to Defaulter to Repay their Loans

March 27, 2008	(Be the first to rate this story!)  Loading ...
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The Reserve Bank proposes to make it mandatory for banks to give loan defaulters one last opportunity to repay before taking possession of the mortgaged property.

In its second draft guidelines on recovery agents released today, RBI said the re-possession procedures should follow the “letter and spirit” of the Indian Contract Act and must provide borrowers a final chance to settle loan dues before sale or auction of the mortgaged property by banks.

The re-possession clause in the mortgage agreement should also include provisions for giving the possession of property back to the borrowers, it said.

The apex bank has sought public comments on the second draft guidelines within 10 days.

The draft proposes that banks should ensure that all calls made by recovery agents to customers and vice versa are recorded for future reference.

The banks will also be required to put up an updated list of recovery agents on their websites, it said.

The institutions, the draft said, should on their level try to address the grievances of the borrowers before transferring the case to recovery agents.

“However, where the bank is convinced, with appropriate proof, that the borrower is continuously making frivolous/vexatious complaints, it may continue with the recovery proceedings,” it stated.

RBI has earlier asked Indian Banks’ Association to formulate, in consultation with Indian Institute of Banking and Finance (IIBF), a certificate course for recovery agents, direct selling and marketing agents.

News Published Under:   Real Estate India, Banking and Finance |

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