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Loans
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Recovery men disregard RBI norms, continue to harass customers
MUMBAI: Priya Kulkarni is a teacher at a school for mentally challenged children in the island city of Mumbai. Few years ago she took a personal loan of Rs1 lakh from a leading foreign bank to pay for the treatment of her ailing mother. Due to various reasons, she couldn’t keep up with the repayments. And then the bank set recovery agents lose on her.
She is the only earner for the family but has stopped teaching as the agents were creating nuisance at the school as well. “‘Agar paisa nahin hai to dhanda karke do (if you do not have money, then resort to prostitution to pay us),’ they told me in front of my principal and other colleagues,” she says.
“I am not in a mindset to take care of my students because of this harassment,” she says. But the agents keep calling up even at home.
The Reserve Bank of India’s guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks, issued in November 2006, say: “The bank and their agents should not resort to intimidation or 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 debtors’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.”
The Banking Codes and Standards Board of India’s ‘Code of Bank’s Commitment to Customers’ (CBCC) also clearly states, “During visits to your place for dues collection, decency and decorum would be maintained.”
Recovery agents clearly don’t follow this. In spite of the stringent RBI guidelines, the recovery agent menace is far from controlled.
Kulkarni has already paid the bank Rs1.94 lakh on a loan of Rs 1 lakh. The interest rate being charged is so high that her repayment is still not over. She approached the bank for rescheduling the loan but her request has not been approved so far.
“One day, the agents came in the evening and stayed put for 2.5 hours and said, ‘We will stay here. You can cook and make arrangements for us.’ When I told them that I have spoken to the nodal officer of the RBI, they retorted, ‘Did RBI give you the money?’” Kulkarni told DNA.
Dombivli resident Surekha Sathe lost her husband last Diwali. Since his death she has been troubled by recovery agents even late in the night. “They come and sit in my house for more than two hours after 8pm. I live alone after my husband’s death,” says Sathe.
The CBCC clearly states that the bank’s representatives will contact the customer between 7 am and 7 pm “unless special circumstances of your business require otherwise”.
The recovery agents represent a leading new generation private sector bank and want her to repay outstanding debt on her husband’s credit card. The bank clearly has no right to recover the amount from Sathe, who has submitted her husband’s death certificate to the bank. “I have even written to the banking ombudsman stating that it is not my liability,” she adds.
But the recovery agents still trouble Sathe and threaten to even disturb her neighbours. “After my husband passed away, I have taken up teaching pre-school students and the agents keep calling during the school hours. It is quite disturbing,” she says. She has registered a complaint with the police and since then the phone calls have stopped.
New generation private sector banks and foreign banks have a clear disregard for RBI guidelines. Parag Shah, chief executive officer of recovery agent firm Adikrut Japti Avam Vasuli, says, “As a matter of policy we work for public sector banks only and we have no pressures. We do not work for private sector banks as our mindset does not go in tandem with theirs,” he says.
Bankers, however, say they have been following the CBCC. “We already have a code of conduct. Like public sector banks, we also have to follow it strictly. If we come across any instance of harassment by recovery agents, we talk to them and, if needed, terminate their services,” says AP Bundellu, deputy managing director, retail, at IDBI Bank.
(Names have been changed on request)
DNA Money..............
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really would like to know more details about that...
In reply to:
Get interest-free loans from CDI
Posted by :
latikav
Chandigarh, Sep 1 (PTI) Integrated media and entertainment company Compact Disc India has decided to grant interest-free loan to those holding shares for the last 10 years to enable them to meet their personal, medical and educational needs.
The company has set-up a shareholders welfare fund with initial capital of Rs 50 lakh for the purpose, an official release said here.
"The creation of shareholders' welfare fund will give us a chance to meet personal, medical and educational needs of the members who have been the company's shareholders since the last 10 years," CDI Chairman Suresh Kumar said.
Besides, the city-based firm has also decided in its board meeting to declare 10 per cent dividend for all shareholders for the financial year 2007-08.
CDI has reported a 109 per cent growth in net profit for the first quarter ended June 30 during this fiscal. The company recorded a net profit of Rs 8.35 crore against Rs 3.98 crore in the corresponding quarter last year.
Total income stood at Rs 43.36 crore compared with Rs 20.22 crore in the same quarter a year ago, reflecting a growth of 114 per cent, and earnings per share increased to Rs 8.73.
OutLook............. 
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Chandigarh, Sep 1 (PTI) Integrated media and entertainment company Compact Disc India has decided to grant interest-free loan to those holding shares for the last 10 years to enable them to meet their personal, medical and educational needs.
The company has set-up a shareholders welfare fund with initial capital of Rs 50 lakh for the purpose, an official release said here.
"The creation of shareholders' welfare fund will give us a chance to meet personal, medical and educational needs of the members who have been the company's shareholders since the last 10 years," CDI Chairman Suresh Kumar said.
Besides, the city-based firm has also decided in its board meeting to declare 10 per cent dividend for all shareholders for the financial year 2007-08.
CDI has reported a 109 per cent growth in net profit for the first quarter ended June 30 during this fiscal. The company recorded a net profit of Rs 8.35 crore against Rs 3.98 crore in the corresponding quarter last year.
Total income stood at Rs 43.36 crore compared with Rs 20.22 crore in the same quarter a year ago, reflecting a growth of 114 per cent, and earnings per share increased to Rs 8.73.
OutLook................
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Do banks accept Gold bars (sold by them) as collateral?...
In reply to:
Get a loan against fixed deposit
Posted by : latikav
These are cheaper and easier to get than personal loans
MUMBAI: These days, the interest rate of most personal loans is between 18% and 25%. The interest charged on floating rate home loans, on the other hand, is around 12%. The difference is glaring.
The bank providing personal loan takes a greater amount of risk than one giving a home loan. In case of a personal loan, if the borrower decides to default, the bank does not have access to any collateral or security, i.e. it does not have anything to sell off and reclaim the amount loaned out.
The risk on such loan defaulters is built into the interest rate being charged by the banks. So, individuals who repay the personal loan effectively pay for even those who don’t.
Home loans cost less than personal loans because the bank can always sell the house bought with the home loan and reclaim the amount still to be paid.
However, there are certain ways in which individuals can take a loan, use it for personal purposes and avoid paying an interest as high as that on personal loans.
One such way is a loan against a fixed deposit. In this case, the bank can liquidate the fixed deposit in case the borrower defaults. So, the interest rates charged on such loans are normally a few percentage points higher than the interest rates on fixed deposits.
This is clearly much less than the interest rate charged on personal loans. Hence, if you have a fixed deposit lying with you and you do not wish to liquidate it to meet a personal need, you can use it to get a loan from a bank.
All loans offered against collaterals always turn out to be cheaper than personal loans.
Therefore, tell the bank that you will repay the loan within the stipulated time — not by words, but by action. Tender a security, which the bank can claim if needed.
Banks will willingly give you a loan at a lower rate, as they are assured that you would rather pay off to get back the security that you have tendered.
Such loans can be asked for by tendering life insurance policies, National Savings Certificate, RBI Bonds, gold jewellery, bank fixed deposits, shares and debentures.
Some even accept mutual funds as security.
Also, along with the lower interest rate, the processing fees charged for loans against security (up to 0.5% of the loan amount) are low as compared with those on a personal loan (1-2% of the loan amount).
In spite of the low rates offered, however, such loans are not very popular.
This is because banks have not been promoting such loans actively.
Interestingly, such loans were popular in an era when the banks were not actively offering personal loans. Maybe it’s time, they made a comeback.
DNA Money.........
Tracked by: 0 Boarder
These are cheaper and easier to get than personal loans
MUMBAI: These days, the interest rate of most personal loans is between 18% and 25%. The interest charged on floating rate home loans, on the other hand, is around 12%. The difference is glaring.
The bank providing personal loan takes a greater amount of risk than one giving a home loan. In case of a personal loan, if the borrower decides to default, the bank does not have access to any collateral or security, i.e. it does not have anything to sell off and reclaim the amount loaned out.
The risk on such loan defaulters is built into the interest rate being charged by the banks. So, individuals who repay the personal loan effectively pay for even those who don’t.
Home loans cost less than personal loans because the bank can always sell the house bought with the home loan and reclaim the amount still to be paid.
However, there are certain ways in which individuals can take a loan, use it for personal purposes and avoid paying an interest as high as that on personal loans.
One such way is a loan against a fixed deposit. In this case, the bank can liquidate the fixed deposit in case the borrower defaults. So, the interest rates charged on such loans are normally a few percentage points higher than the interest rates on fixed deposits.
This is clearly much less than the interest rate charged on personal loans. Hence, if you have a fixed deposit lying with you and you do not wish to liquidate it to meet a personal need, you can use it to get a loan from a bank.
All loans offered against collaterals always turn out to be cheaper than personal loans.
Therefore, tell the bank that you will repay the loan within the stipulated time — not by words, but by action. Tender a security, which the bank can claim if needed.
Banks will willingly give you a loan at a lower rate, as they are assured that you would rather pay off to get back the security that you have tendered.
Such loans can be asked for by tendering life insurance policies, National Savings Certificate, RBI Bonds, gold jewellery, bank fixed deposits, shares and debentures.
Some even accept mutual funds as security.
Also, along with the lower interest rate, the processing fees charged for loans against security (up to 0.5% of the loan amount) are low as compared with those on a personal loan (1-2% of the loan amount).
In spite of the low rates offered, however, such loans are not very popular.
This is because banks have not been promoting such loans actively.
Interestingly, such loans were popular in an era when the banks were not actively offering personal loans. Maybe it’s time, they made a comeback.
DNA Money............
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thanks you ashalanshu
...
In reply to:
home loan
Posted by : ashalanshu
Dear umeshlimbu, If u r able to generate more than 10.5% (what u r paying as interest on home loan), Here i\\`m talking post tax return. U should opt to invest ur surplus amount. If u r not able to generate that much interest, prepaying a part or full home loan w\\`d be a wiser choice.
Thanks
Ashal
Tracked by: 0 Boarder
Dear umeshlimbu, If u r able to generate more than 10.5% (what u r paying as interest on home loan), Here i\\`m talking post tax return. U should opt to invest ur surplus amount. If u r not able to generate that much interest, prepaying a part or full home loan w\\`d be a wiser choice.
Thanks
Ashal...
In reply to:
home loan
Posted by :
umeshlimbu
i borrowed Rs. 1 lac home loan for five years @8%. now the interest rate is 10.5%.. my current outstanding loan is 55000/-. i have some surplus money. kindly guide me should i repay the loan or invest the money to some other instruments and pay the home loan EMIs as usual.
Tracked by: 0 Boarder
i borrowed Rs. 1 lac home loan for five years @8%. now the interest rate is 10.5%.. my current outstanding loan is 55000/-. i have some surplus money. kindly guide me should i repay the loan or invest the money to some other instruments and pay the home loan EMIs as usual. ...
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Dear cool on world, whatever u part prepay, it 'll go for ur principal amount. After part prepay, from next month, the interest 'll be charged on the remaining principal amount only.
For example u have 14.5L Rs. outstanding balance as on date. & decide to prepay 5.5L rs.
Ur bank 'll charge prepmt. penalty if any & 'll accept the 5.5: part prepay against outstanding loan. Hence from next EMI ur Interest 'll be calculated on 9L rs.
Thanks
Ashal...
In reply to:
home loan
Posted by : umeshlimbu
i borrowed Rs. 1 lac home loan for five years @8%. now the interest rate is 10.5%.. my current outstanding loan is 55000/-. i have some surplus money. kindly guide me should i repay the loan or invest the money to some other instruments and pay the home loan EMIs as usual.
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