How to discreetly handle EMIs with recovery agents
These are the prescribed RBI guidelines for authorised collection agents to connect with borrowers who have trouble repaying EMIs.
In 2015, my next-door neighbours defaulted on a home-loan by Axis Bank. I noticed it only when the recovery agents sealed the door and pasted a notification for auctioning the property. I was surprised that the agents had been visiting the property for months, yet I never heard any ruckus over defaulting or sealing the property. This intrigued me to ask my neighbours. I found that they were aware of the entire process of recovery. It’s not every day that we see recovery agents in our neighbourhood. Recovery processes can be very discreet if one is fully aware of the process. We act with a lot of maturity and responsibility when we are prepared for the situation.
Today the country is staring at such a situation with a lot of caution. More than 40% of the auto-debits have bounced in Nov 2020. According to Centre for Monitoring Indian Economy, almost 21 million salaried people lost their jobs causing banks and NBFCs to go into collection overdrive. Recovery agencies are contacting double the borrowers to repay than pre-COVID times. God forbid, if you are one of them, the following points will help in handling it discreetly.
1. First things first, at what point in a loan cycle does a collections agency or a recovery agent contact me?
Debt becomes bad when it’s not paid for three consecutive months. But, when you are about to fall into such a situation, try to do everything to repay in time. Never delay EMIs. You will earn a lot of mental peace.
2. Can I get a call even before 90 days of delinquency?
Yes. Lenders (not recovery agents) can call to check if you have forgotten to repay or was it unavoidable.
3. When does a lender appoint an agent to recover a loan?
The lender appoints an agent to recover a loan when you are 90 days past the due date. Before this, you shall receive all the information from the lender and sufficient time for payment of dues.
4. What happens after the agent is appointed?
Agents work under tight deadlines to recover loans. They have multiple cases to handle each day. You are one of them. They shall ONLY call in first 18–30 days to seek information and time for payment of dues.
5. Can agent call me anytime? Or is there a schedule?
The collection agent will contact between 7 am and 7 pm on weekdays unless business conditions or your occupation require special circumstances.
6. Can recovery agents call my friends and family?
There is no provision in RBI’s policy that lenders call your friends and family to name and shame you. On the other hand, there is no clause prohibiting the agents to call too. It is usually a sign of lack of trust when agents call your close ones. Agents will call your friends and family only when you are either avoiding their calls or falling short of your own words.
Note: Do not overpromise or avoid any call. Text the agent immediately about your next available time in case you are unable to take calls.
7. Can I also request a time to call back instead?
Yes, you can request to avoid calls at a particular time to respect privacy. Inappropriate occasions such as bereavement in the family or such other calamitous occasions can also be avoided for making calls/visits to collect dues.
Note: If the agent finds out that it is not true then you will further lose trust with the lender for any relaxation or restructuring of the loan. Even other lenders may avoid you in future.
8. What happens if I haven’t cleared dues even after seeking sufficient time?
Now you have automatically opened the gates for the agent to meet you. However, worry not. The agent will not pay a surprise visit. RBI’s collection policy is built on courtesy, fair treatment, and intellectual persuasion. Although agents are incentivised to skip the dirt, they cannot bend the rules set by RBI.
9. How does RBI’s policy help me?
Keeping in mind, the courtesy, fair treatment, and intellectual persuasion, you can expect to receive the following:
Notification: You will receive a written notification from the lender when recovery proceedings are initiated against you. If you do not receive it or intentionally avoid receiving it, then the agent will carry a copy of authorisation during the visit. You will also receive a phone call from the agent before visiting you.
Identity: RBI mandates that agents must carry their ID, training certificate issued by IIBF and should call borrowers before visiting their homes.
Privacy: During visits for dues collection, the agents are required to maintain decency and decorum. The recovery agents are properly trained to handle with care and sensitivity, their responsibilities, in particular aspects like hours of calling, the privacy of customer information etc.
Place of meeting: You will be contacted at a place of your choice. The collection agent will visit your home when there is no specified place of choice. In case of unavailability at home, the place of meeting will be borrower’s office. Do not avoid meeting the agent at any cost else you can be marked absconding which can lead you to a court of law.
10. IDs and notification can be fake. How do I verify the authenticity of the recovery agent?
Lenders are mandated by RBI to list details of the recovery agency/ company on their website. e.g. SBI and HDFC have listed names of Collection Agencies on their website.
11. What if the conversation turns rude?
The lender is responsible for the conduct of the recovery agent. RBI mandates the lender to record time of call, number of calls and content of the conversation in a tape. It is the duty of both the lender as well as the recovery agency to make the recording available whenever required by an authority.
RBI mandates that the contract between the lender and recovery agency must ensure civilised, lawful and unquestionable behaviour from collection agents. None of the agent’s behaviour should be induced or influenced by incentives. A borrower can file a complaint with RBI for indecent behaviour at any time.
12. What happens when the recovery agent is not the same as the previous one?
When the lender changes the recovery agency during the process, the new agent should carry the new notice and the authorisation letter along with his identity card. The lender must also duly inform you about the change before the visit.
13. I have heard Lok Adalats resolving debts. When does it help?
Loans, personal loans, credit card loans and housing loans with less than INR 10 lakhs can be referred to Lok Adalats organised by Civil Courts.
14. I am going through a lot of stress & anxiety. How should I respond?
Most of us in bad situations go through a lot of anxiety. So it is human to accept that you are not alone in this. You did not plan deliberately to arrive at this situation, nor did you fail your family nor yourself.
Lenders are encouraged to have in place an appropriate mechanism to utilise the services of the credit counsellors for providing suitable counselling to the borrowers where it becomes aware that the case of a particular borrower deserves sympathetic consideration.
You may also talk about your burden with close family or a trusted friend. Don’t try to carry it yourself. Just talking to someone can sometimes bring clarity to the chaos.
Tips: How to avoid recovery agents at your doorstep
- Most obvious tip: Do everything in your might to pay EMIs on time. That’s the easiest way to avoid this situation.
- Use reserves: Check your non-current assets such as gold, PPFs, FDs, MFs, etc. and pay all the dues. This is the moment what you have been planning for bad times, so use all the reserves to overcome this situation at the earliest.
- Pay credit cards dues on time: Credit cards are one of the top three reasons for defaulting payments. Always pay your credit card bills on time. It’s the most common delinquency globally. A credit card debt can be easily converted into an EMI instead of total loan outstanding amount.
- In case you are unable to repay on time, it’s best to inform the lender about your situation. If your payment history is good, the lender may be willing to work towards a solution. However, this depends on the lender’s policy. RBI has stated a framework for a resolution of COVID related stress.
- BCSBI — Codes — Code of Banks Commitment to Customers — Collection of Dues
- Reserve Bank of India: 2008 Review of policy on recovery agents
- Reserve Bank of India — Notifications: 2007 Review of policy on recovery agents
- Reserve Bank of India — Notifications Restructuring of loans due to COVID-stress.