Normal debt recovery procedure followed by banks

Normal debt recovery procedure will generally apply to the debtors who are willing to pay the dues with normal recovery process.  Based on the regulatory guidelines of procedure of tribunal on debt recovery, following procedure may be outlined for such recovery.  However the recovery agents should follow the bank-specific debt recovery procedure as advised by their principal. Below are given the main rules for making telephone calls and visit to the debtor for recovery of dues:

1)   The recovery agent has been authorized by the bank to collect the past due debt from the particular customer.

2)   The customer has been notified by the bank of the details of the recovery agent for collection of the past-due debt.

3)   Making customer calls:   This is the first step in recovery procedure and following rules should be followed generally:

  1. Calls are made from the same number as advised by the bank to the customer.
  2. The agents disclose his identity and authority at the first instance.
  3. The agent contacts the debtor between 0700 hours and 1900 hours, unless the special circumstance of his/her business or occupation requires the bank to contact of a different time.  Under no circumstances, can the customer be called beyond 2100 hours.
  4. All calls where the customer becomes abusive or threatening should be appropriately documented.
  5. Customer’s question be answered in full. They should be provided with information requested and given assistance in making recovery.  Minor issues should be resolved.
  6. How often to call customer/ The purpose of a collection call as to bring to the Customer’s notice the obligation and to seek a commitment to pay on a specified date.  Once a promise is elicited a call may be made to serve as a reminder and for confirmation of payment.
  7. If the customer is not available during a few calls made by the agent, a message may be left to an adult family member as follows” Please leave a message that ABC had called and request the customer to call ABC back at the given phone number”.  The message should not indicate that the customer ABC has overdue amount , or the call originated from a Recovery agency.

4)   Visit to customer (debtor)   This would be the second step in collection process.  Following procedure should generally be followed.

(i) A customer should be visited for debt collection only after these conditions are satisfied;

  • The debtor has not paid the due amount within the days of grace and the dues are still outstanding against him/her.
  • The debtor has been notified of the amount due and also of the name of the collection agent.
  • The collection agent has taken an appointment from the debtor for the visit.

(ii) During visit, the agent should be in proper dress and appearance, or wear the dress prescribed by the principal and follow the timing and place of the visit as per the principal’s or RBI/IBA code, unless otherwise agreed by the debtor expressly.

(iii) At the first stance, the agent should utter salutation words (like good morning/evening…sir/madam, as per custom of the bank).   The agent should thereafter show his ID card and authority given by the principal for debt collection from the debtor./ Only after these initial formalities, the conversation regarding debt collection should start.

(iv) The time of visiting the customer will be generally between 0700 hours to 2100 hours.  Visits earlier or later than the prescribed time may be made only under the following conditions:

  • When the customer has expressly consented to that timing.
  • When attempts to contact the customer have resulted in information that the customer is normally only available outside these hours and no alternate telephone number is available to contact him/her,
  • When due to nature of the customer’s employment i.e. working in shifts e.g. call center, hotel. He/she is usually available outside these hours.

(v) The agent should respect privacy of the debtor.  Privacy policy as discussed above for calls would apply during visits also.

(vi) During the visit, due respect and courtesy should be shown to the customer and the interactions should be civil and polite as per the principal’s policy.

(vii) During interactions with the debtor, the agent must not use threats or intimidation verbally or by body language.  Under no circumstances, any physical violence be used in debt collection process.