Ref : E&R/Press/2005/RBI.16/JSD

RBI Steps Urged Against Banks Engaging Thugs to Recover Dues

“The State Consumer Disputes Redressal Commission, Chennai, has directed Standard Chartered Bank to pay Rs. 20 lakh to Capt. A. Ranganathan and his wife, Mrs. Lakshmi Ranganathan, in two months of its order. The Bank sent hirelings and thugs as `Bill Collectors’ to the couple’s house to collect Rs. 27,022.35 of an allegedly bounced cheque, which the couple told they had not sent.”

“Sending thugs to the house of borrowers and threatening them was a despicable act,” the Commission said. The Commission further observed that granting of such huge compensation alone would be an eye opener to such a banking institution. It is high time the Reserve Bank of India took strong note of it and came down severely upon such banks. The Commission would even suggest that they do not hesitate to cancel the license of such bank”.

Consumer Education and Research Centre (CERC), Ahmedabad, forwarded this case as a reference to Dr. Y. V. Reddy, Governor, Reserve Bank of India, for appropriate action against the Standard Chartered Bank and directions to the Working Group for taking long-term corrective measures.

CERC, in its earlier note submitted to the Chairman of the RBI Working Group on Credit Cards, had referred to the Fair Debt Collection Practices Act of the USA under which no credit card Bank or Company is allowed to engage any person or agency to recover the dues of the Bank or credit card company from the cardholders. Only remedy that the Bank or Credit Card Company can follow is to file a suit for recovery of dues like any other case of dues by and between the lender and the borrower or creditor and debtor. Unfortunately, the Working Group has not taken this submission seriously, much less literally, CERC added and requested the RBI Governor to take corrective measures by the Working Group.

CERC endorsed a copy of this message to Mr. R. Gandhi, Chairman of the Working Group, for his information and with a request for corrective action.

Date : 28/05/2005
Place : Ahmedabad

Pritee Shah
Editor
INSIGHT - The Consumer Magazine