Beruflich Dokumente
Kultur Dokumente
CHAPTER 1
Introduction
1
RECOVERY MANAGEMENT IN BANKS
2
RECOVERY MANAGEMENT IN BANKS
3
RECOVERY MANAGEMENT IN BANKS
Advantages:
1) The process of assigning debt collection to outsides
enables officials from Banks to develop more
remunerative new business.
2) Third party involvement in debt collection has proven
time and again to improve the chances of recovering
bank dues as these people are specialists in
negotiating with debtors and the result usually speak for
themselves;
3) A skillfully negotiated debt collection could mean saving
on litigation cost.
4) The process of assigning debt collection to outsides
enables officials of non-Banks. Cost to develop more
beneficial new business.
Disadvantages:
4
RECOVERY MANAGEMENT IN BANKS
5
RECOVERY MANAGEMENT IN BANKS
10) Don’t forget that the debtor is a human being and deserves
6
RECOVERY MANAGEMENT IN BANKS
7
RECOVERY MANAGEMENT IN BANKS
8
RECOVERY MANAGEMENT IN BANKS
10
RECOVERY MANAGEMENT IN BANKS
11
RECOVERY MANAGEMENT IN BANKS
12
RECOVERY MANAGEMENT IN BANKS
13
RECOVERY MANAGEMENT IN BANKS
CHAPTER 2
What is NPA?
For a bank, an NPA or bad debt is usually a loan that is
not producing income. Earlier it was largely applicable to
businesses. But things have changed with banks widely
extending consumer loans (home, car, personal and
education, among others) and strict asset classification
norms.
If a borrower misses paying his equated monthly
installment (EMI) for 90 days, the loan is considered bad, or
an NPA. High NPAs are a sign of bad financial health. This
has wide-ranging ramifications for a bank, especially in the
stock market and money market. So, as soon as a debt goes
bad, the banks want it either made better or taken out of their
books.
14
RECOVERY MANAGEMENT IN BANKS
15
RECOVERY MANAGEMENT IN BANKS
16
RECOVERY MANAGEMENT IN BANKS
17
RECOVERY MANAGEMENT IN BANKS
18
RECOVERY MANAGEMENT IN BANKS
pay’.
• Doubtful debtors, i.e. whose who can pay the reduced
19
RECOVERY MANAGEMENT IN BANKS
CHAPTER 3
22
RECOVERY MANAGEMENT IN BANKS
Repossession of Security
Repossession of security is aimed at recovery of dues and
not to deprive the borrower of the property. The recovery
process through repossession of security will involve
repossession, valuation of security and realization of security
through appropriate means. All these would be carried out in
23
RECOVERY MANAGEMENT IN BANKS
25
RECOVERY MANAGEMENT IN BANKS
26
RECOVERY MANAGEMENT IN BANKS
27
RECOVERY MANAGEMENT IN BANKS
28
RECOVERY MANAGEMENT IN BANKS
29
RECOVERY MANAGEMENT IN BANKS
30
RECOVERY MANAGEMENT IN BANKS
31
RECOVERY MANAGEMENT IN BANKS
34
RECOVERY MANAGEMENT IN BANKS
35
RECOVERY MANAGEMENT IN BANKS
36
RECOVERY MANAGEMENT IN BANKS
37
RECOVERY MANAGEMENT IN BANKS
38
RECOVERY MANAGEMENT IN BANKS
from the said amount, the amount of debt due from the
defendant under this Act and such person shall comply with
any such requisition and shall pay the sum so deducted to
the credit of the Recovery Officer: Provided that nothing in
this sub-section shall apply to any part of the amount exempt
from attachment in execution of a decree of a civil court
under section 60 of the Code of Civil Procedure, 1908 (5 of
1908).
(3) (I) The Recovery Officer may, at any time or from time to
time, by notice in writing, require any person from whom
money is due or may become due to the defendant or to any
person who holds or may subsequently hold money for or on
account of the defendant, to pay to the Recovery Officer
either forthwith upon the money becoming due or being held
or within the time specified in the notice (not being before the
money becomes due or is held) so much of the money as is
sufficient to pay the amount of debt due from the defendant
or the whole of the money when it is equal to or less than
that amount.
(ii) A notice under this sub-section may be issued to any
person who holds or may subsequently hold any money for
or on account of the Defendant jointly with any other person
and for the purposes of this subsection, the shares of the
joint holders in such amount shall be presumed, until the
contrary is proved, to be equal.
(iii) A copy of the notice shall be forwarded to the defendant
at his last address known to the Recovery Officer and in the
39
RECOVERY MANAGEMENT IN BANKS
40
RECOVERY MANAGEMENT IN BANKS
41
RECOVERY MANAGEMENT IN BANKS
Credit counseling
43
RECOVERY MANAGEMENT IN BANKS
CHAPTER 4
44
RECOVERY MANAGEMENT IN BANKS
45
RECOVERY MANAGEMENT IN BANKS
46
RECOVERY MANAGEMENT IN BANKS
47
RECOVERY MANAGEMENT IN BANKS
4.2 Article
ICICI Bank fined Rs500, 000 for rough recovery methods
A consumer commission has ordered ICICI Bank, the
country’s largest private sector lender, to pay a fine of
Rs500, 000 for use of force by the bank’s recovery agent on
48
RECOVERY MANAGEMENT IN BANKS
49
RECOVERY MANAGEMENT IN BANKS
CHAPTER 5
50
RECOVERY MANAGEMENT IN BANKS
51
RECOVERY MANAGEMENT IN BANKS
but not before that date. If the debt is not paid on the due
date it becomes over due or past due.
Agent:
It is a legal term defined in section 182 of Indian
Contract Act as “a person employed to do any act for another
or to represent another in dealings with third person”. The
person for whom such acts are done, or who is represented,
is called the “Principal”. An agent has thus an authority to do
acts on behalf of the principal within the limits of the authority
and thereby bind the principal for such acts in relation to third
parties. There are several kinds of agents e.g. brokers
(financial or commodity brokers), auctioneers, insurance
agents, estate or property agents, commission agent, selling
agents, marketing agents, debt recovery agents.
Debt Recovery Agent may now be defined as a person
or entity engaged by a bank for the purpose of collecting
specified loans, or advances or other kind of dents from the
debtors (or borrowers) in accordance with the specified terms
and conditions. In the above examples of the car loan to
Ram, if the bank (creditor) engages XY will be called as Debt
Recovery Agent of the bank.
52
RECOVERY MANAGEMENT IN BANKS
53
RECOVERY MANAGEMENT IN BANKS
the new agent should carry the notice and the authorization
letter along with his identity card.
The notice and the authorization letter should, among
other details, also include the telephone numbers of the
relevant recovery agency. Banks should ensure that there is
a tape recording of the content / text of the calls made by
recovery agents to the customers, and vice-versa. Banks
may take reasonable precaution such as intimating the
customer that the conversation is being recorded, etc.
The up to date details of the recovery agency firms /
companies engaged by banks may also be posted on the
bank’s website. Where a grievance/ complaint has been
lodged, banks should not forward cases to recovery agencies
till they have finally disposed of any grievance / complaint
lodged by the concerned borrower. However, where the bank
is convinced, with appropriate proof, that the borrower is
continuously making frivolous / vexatious complaints, it may
continue with the recovery proceedings through the
Recovery Agents even if a grievance / complaint is pending
with them. In cases where the subject matter of the
borrower’s dues might be sub judice, banks should exercise
utmost caution, as appropriate, in referring the matter to the
recovery agencies, depending on the circumstances.
54
RECOVERY MANAGEMENT IN BANKS
55
RECOVERY MANAGEMENT IN BANKS
56
RECOVERY MANAGEMENT IN BANKS
57
RECOVERY MANAGEMENT IN BANKS
58
RECOVERY MANAGEMENT IN BANKS
59
RECOVERY MANAGEMENT IN BANKS
2) Persuasive skill:
60
RECOVERY MANAGEMENT IN BANKS
61
RECOVERY MANAGEMENT IN BANKS
62
RECOVERY MANAGEMENT IN BANKS
63
RECOVERY MANAGEMENT IN BANKS
64
RECOVERY MANAGEMENT IN BANKS
65
RECOVERY MANAGEMENT IN BANKS
Case study
66
RECOVERY MANAGEMENT IN BANKS
ABC bank:
67
RECOVERY MANAGEMENT IN BANKS
68
RECOVERY MANAGEMENT IN BANKS
Conclusion
69
RECOVERY MANAGEMENT IN BANKS
BIBLIOGRAPHY
PRIMARY DATA:
IDBI Bank (Cuffe Parade, Mumbai)
SECONDARY DATA:
Book reference
Handbook on debt (Indian Institution of banking and
finance)
Web reference
www.rbi.co.in
www.icicibank.com
www.iibf.org.in
70
RECOVERY MANAGEMENT IN BANKS
- Mandar
71