The number of cases where reimbursement attorneys involve lending organizations harass the borrower for non-repayment of a borrowed amount has increased substantially over time. These reports come from all categories of lenders, starting with unauthorized loan applications to establish large private lending institutions. These reports, logically, created an act from the banking regulator.
Last week, the RBI filed a $ 200 million fine in Bajaj Finance for violating rules on acquisition and collection procedures. The amount of money may not be huge here but what should be noted is the message that the regulator clearly defines this company and other companies. RBI stated that Bajaj Finance could not confirm that its recovery agents never harassed its customers while getting the funds back from them.
Customer harassment is a major concern and needs to be taken care of with a systematic approach. It was not long before reports of suicide emerged from Hyderabad following customer harassment by unauthorized digital borrowing applications.
Why do such things happen again? The bank official told me that these were ‘part of the game’. Lenders are under constant pressure to make money and often give a free hand to third-party agents hired to do the job.
On a broader scale, the RBI has been trying to bring about customer equity and conduct between banks and NBFCs through various channels. There have been several committees appointed from periodic customer service and customer protection, including the Tarapore Committee, the Goiporia Committee, the Damodaran Customer Management Committee and the Sadasivan Working Group. Th significance of Consumer Protection has also been highlighted by the Financial Sector Transformation Committee which is chaired by Dr. Raghuram G. Rajan.
Through a consumer rights charter, released a few years ago, the central bank emphasized five key points. (i) The Right to Good Governance; (ii) Right to Openness; Impartial and Reliable Performance; (iii) Right to Eligibility; (iv) Right to Privacy; and (v) the right to receive redress of grievances and compensation. Repeatedly, the RBI has been emphasizing the importance of ‘fair treatment’ but such calls have fallen on deaf ears.