The Supreme Court has ordered the commercial banks to go with humanitarian methods while recovering loan arrears from customers. The Supreme Court criticized commercial banks for the way they use to recover the instalments and loan arrears. Some of the banks deploy musclemen to take unpaid amount from defaulters. Several banks do seize the vehicles in case of non-payment of instalments.
To restrict the practice, the apex court has given a strong direction to just stop the illegal practices. The Uttar Pradesh police had filed a case in the court against several top officials of the ICICI Bank. The bank officials had deployed goons to seize the truck owned by a widow.
They had alleged the widow for the non-payment of the loan instalments. The Supreme Court bench of Justice A.R. Lakshmanan and Justice Altamas Kabir invalidated the case but criticized the banks to stop using the goons to get loan arrears.
The SC bench said:
The court does not appreciate the modus operandi adopted by the bank in seizing the vehicle from the possession of the writ petitioner. The practice of hiring recovery agents who are musclemen is condemnable and needs to be discouraged.
Earlier, the ICICI bank had filed a plea in the Supreme Court against the Allahabad High Court judgment in this case. The Allahabad high court had directed the police to register a First Information Report (FIR) against the bank officials for sending musclemen to seize the truck.
Later, the Supreme Court also gave the directives to the Reserve bank of India to appoint a special committee for recommending strategy on employing agents to recover loans from defaulters. The RBI should issue proper licence to the recovery agents to make them accountable. The SC bench said further that the bank concerned would be responsible for the charge of harassment by the agents.