Anurag Thakur, the Union Minister of State for Finance in an answer shared during the Lok Sabha proceedings on Monday said that banks do not have the power to employ bouncers for forceful recovery of loans from their customers.
Thakur during the Question Hour said, "No one has any power to appoint any musclemen or bouncers for recovery of loans forcefully."
He further said that the RBI had issued its 'Guidelines on Fair Practices Code for Lenders' which are required to be adopted by banks and duly approved by their Board.
"The said circular prohibits lenders from resorting to undue harassment in recovering loans, viz., persistently bothering borrowers at odd hours, use of muscle power for recovery of loans etc," he said.
With regards to complaints received, the minister said the RBI had informed that complaints received by it regarding violation of the said guidelines and abusive practices followed by banks' recovery agents are viewed seriously.
"In such cases, the RBI can consider banning the bank concerned from engaging recovery agents in a particular area for a specified period."
"In case of persistent breach of above guidelines, the RBI can also consider extending the period or the area where the bank concerned is barred from engaging recovery agents," he added.
He also said that there is a clear directive of the Reserve Bank in appointing recovery agents only after due police verification and fulfillment of relevant formalities.