ICICI, HDFC Bank violating norms on recovery agents: Govt

The government today said the banking ombudsman has received several complaints against private sector lenders including HDFC Bank and ICICI Bank of violating RBI guidelines on engagement of agents to recover loans.

"RBI has reported that 120 complaints had been received by 15 Banking Ombudsman Offices in year 2009-10 regarding non-observance of RBI guidelines on engagement of recovery agents by private sector banks," Finance Minister Pranab Mukherjee said in Lok Sabha.

"Further, it has also been reported that HDFC Bank and ICICI Bank have reportedly violated the said guidelines," he said.

On the remedial measures, he said, RBI has issued detailed guidelines to banks on engagement and training of recovery agents. Banks have been advised to ensure that the recovery agents are properly trained to handle with care and sensitivity particularly in aspects like hours of calling, privacy of customer information etc.

Banks have been advised to ensure that the contracts with the recovery agents do not induce adoption of uncivilised, unlawful and questionable behaviour of recovery process, he said.

The Finance Minister also said that the banks, as principals, being responsible for actions of their agents, have been advised to ensure that the agents engaged for recovery of the dues should strictly adhere to the guidelines and instructions issued by RBI, including the Banking Codes and Standards Board of India.

Banks engaging recovery agents have been advised to undertake a periodical review of the mechanism to learn from experience and to effect improvement, he said.

Under the Banking Ombudsman Scheme, 2006 as amended in 2009, the Ombudsman can award compensation up to Rs one lakh to those harassed by the agents.

Replying to another question, Mukherjee said the Khandelwal Committee in its report has observed that if public sector banks have to truly operate in a competitive environment, wages need to have some co-relation with the performance of staff and profitability of banks.

The committee (headed by former chairman of Bank of Baroda A K Khandelwal) has therefore recommended that PSBs (public sector banks) may have freedom to negotiate wages and service conditions to create a better fit between compensation and performance.