As comapared to state-run banks, exposure of these (private) banks to consumer loans is higher, and to recover these loans, some private sector banks resort to such measures, Bank of India Chairman & Managing Director T S Narayanaswami, told PTI.

“Private banks are more aggressive to procure business,” Mr Narayanaswami said, adding, “this is one of the reasons for banks adopting strong-arm means for loan recoveries.”

Syndicate Bank General Manager Subhash Malhotra observed that “private lenders are very aggressive in recovery proceedings and are outsourcing the recovery work to agents, unlike PSU banks.”

Fully compliant
Mr Narayanaswami said the “matter will get subdued” once the regulator comes up with more stringent measures. “Public sector banks are fully compliant with the rules in recovery procedures,” he added.

However, private bankers felt that “mischievious consumers” manipulate complaints about recovery agents, since they are not willing to repay their loans. According to banking industry sources, almost all private banks and two Non-Banking Financial Companies (NBFC), employ private companies supplying recovery agents.

RBI, as a part of its efforts to curb recovery agents, has asked banks to give minimum of 100 hours of  training to their agents, besides “informing borrowers of the details of recovery agents, engaged for the purpose, while following default cases.” It has also asked banks to  ensure that “the contracts with agents do not induce adoption of uncivilised, unlawful and questionable behaviour for recovery process.”