Tuesday, November 6, 2007

Bank uses goons, fined Rs 55 lakh

In a judgement that reinforces RBI's recent warning to banks on the strong-arm tactics of their collection agents, the State Consumer Commission has slapped a fine of Rs 55 lakh on ICICI Bank for trying to recover a vehicle loan by hiring "goons". They had forcibly dragged out a youth from the car, beaten him up with iron rods and left him bleeding as they drove away with the vehicle.
The recovery agents hadn't even cared to establish the identity of the man they had beaten up - he wasn't the car owner who had defaulted on the bank's installments. He was merely accompanying the owner who was not present on the spot. "We hold ICICI Bank guilty of the grossest kind of deficiency in service and unfair trade practice for breach of terms of contract of hire-purchase/loan agreement by seizing the vehicle illegally," said Justice J D Kapoor, president of the commission.
"The commission has imposed punitive damages of Rs 55 lakh upon ICICI Bank. Of this amount, Rs 50 lakh is to be deposited in favour of the State Consumer Welfare Fund (for legal aid) and a compensation of Rs 5 lakh, including the margin money paid by the borrower towards the loan amount, has to be given to the complainant for the sufferings caused by the bank’s agents in a brutal and boorish manner because of which a youth was hospitalized for more than two weeks and received 17 stitches on his skull and back."
The car belonged to one Tapan Bose, a builder, who had taken a loan from ICICI Bank on May 25, 2005, to buy a Maruti Swift. The recovery agents started hounding him when three of his cheques bounced. According to Bose, the bank had sent no notice saying his installments were not regular.
On January 8, 2007, Tapan had gone to a club near Ferozeshah Kotla, along with his friend's 21-year-old son, Vinod Kumar. As Bose went inside, Vinod waited for him in the car.
A lender liability law on the cards
Harassed bank customers may soon get relief, with the government and RBI reportedly considering a “lender liability” law to fix lending terms and conditions and crack down on unfair recovery means. The law, if it comes into effect, could penalize banks for levying hidden charges or sitting on no-due certificates. RBI is already known to have threatened legal action against banks using strong-arm tactics.
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