In yesterday’s Hindu, Jairam Ramesh identifies a pressing national priority:
“Its list of clients (including 20 top nationalised and cooperative banks) is backed by appointment and commendation letters. There is a detailed description of services offered (investigation, survey, custody, security, valuation and sale of assets etc), which is accompanied by a list of ‘duties’ and an explicit fee structure. The most interesting aspect of the website was its elaborate ‘code of conduct’ and specific guidelines to be followed in its recovery effort.
As Bhatia [the head of recovery operations – a ‘college going’ woman] tells me, the key to their way of doing business is the process they follow. She has a whole checklist of tasks that precede an …. operation to embarrass a defaulter. The first step: ‘‘I research to check the ability to pay and other businesses.’’ …. Secondly, she writes to the company and asks them to pay up. When that fails an operation is planned. This involves informing the local police station and requesting that a constable accompany the recovery team. The building society is notified of the action and defaulter is also given the exact date and time when the recovery team would arrive for collection. This is aimed at providing plenty of opportunity for a person to avoid embarrassment and at least start a negotiation with the bank. As a further precaution, the actual operation is video-recorded and made available to the bank to avoid any charge of misbehaviour against the recovery team.
… Another aspect of this unusual recovery firm is the sophisticated code of conduct prescribed for its employees and posted on its website. It promises ‘‘dignity and respect to customers’’ and a debt collection policy that is not ‘‘unduly coercive in collection of dues’’ but ‘‘built on courtesy, fair-treatment and persuasion’’. It also promises ‘‘fairness and transparency in repossession, valuation and realisation of security’’.”
Dalal’s piece describes how the recovery agency ensured that a high profile restaurant in Mumbai paid up its dues to a prominent bank. It certainly makes for interesting reading. The website of the recovery company indicates that it has recovered a total of Rs 2274.78 lakhs over a period of 6 years.
While this approach does seem to be an improvement over the strong-arm tactics used by recovery agents in previous years, I wonder if it doesn’t tread on the boundary of actions that debt recovery agents can undertake legally. It may well be, however, that unconventional approaches may be required to attend to this pressing problem.