ICICI Bank Chairman To Explain The Use Of Agents For Loan Recovery
The apex court had prohibited the use of recovery agents back in 2007.
In a case that has brought to light illegal recovery tactics used by banks, the Allahabad High Court has directed ICICI Bank Ltd.’s chairman to personally explain why the bank was still using agents for the recovery of loans despite a top court judgement to the contrary.
The court has said that the chairman will have to personally file an affidavit explaining the use of recovery agents, even after the top court expressly held in 2007 that recovery agents cannot be used to recover loans from defaulters.
The case dates to 2002, when Rahul Singh, an American citizen and an Overseas Citizen of India card holder, availed of a loan from ICICI Bank.
In 2007, Singh wanted to leave India and therefore decided to pay his dues and foreclose the loan account before leaving. He paid the dues, received the final closure receipt, and got his mortgaged property discharged, but for reasons best known to the bank, his CIBIL rating still portrayed him as a defaulter.
Since Singh wasn't living in India, his family went to the bank and informed the officers that he had duly repaid the loan in 2007, but the efforts were in vain. The bank even filed a civil suit for recovery of the loan, knowing fully well that the loan had already been paid off.
Rubbing salt into the wound, the bank officials appointed recovery agents, who began making a commotion at Singh's ancestral home in an effort to tarnish his reputation in society.
This prompted Singh to file a criminal defamation and a criminal conspiracy case against the bank’s officers. Since summons were issued to the officers after the case was filed, they moved the Allahabad High Court, seeking to quash the summons.
The court, appalled by the bank's behaviour, has instructed the chairman of the bank to submit an affidavit, elucidating why the bank continues to employ recovery agents despite the top court's explicit prohibition. The court has also directed the chairman to explain why the bank filed a suit for recovery when the loan amount was already paid off.
The next hearing in the case is scheduled for July 10.
