How to Deal with the Loan Recovery Process.

Introduction
The economic impact of the COVID-19 pandemic has been severe, with about 21 million people losing their jobs according to the Centre for Monitoring Indian Economy. In response, banks and NBFCs (Non-Banking Financial Companies) have ramped up their loan recovery efforts, resulting in recovery agencies contacting more borrowers than ever before.

Understanding the Loan Recovery Process
The loan recovery process involves negotiating certain conditions of the loan agreement to help borrowers repay their dues. Debt typically becomes problematic when it hasn’t been paid for three consecutive months. During this period, lenders may reach out to borrowers to check if the missed payments were due to forgetfulness or unavoidable circumstances. After discussions, borrowers are often given additional time to make their payments. If the debt remains unpaid for 90 days past the due date, lenders then appoint recovery agents.

Role of Recovery Agents
Recovery agents usually engage with borrowers within the first 18-30 days of missed payments, primarily through calls to gather information and set a timeline for payment. The Reserve Bank of India (RBI) mandates that lenders provide details of the recovery agency on their website, and it is the borrower’s responsibility to verify the authenticity of the agent.

Key guidelines for recovery agents include:
Communication Timing: Agents are generally allowed to call between 7 am to 7 pm, unless otherwise requested by the borrower.
Documentation: Agents must record the time, content, and number of calls made to the borrower, and this information should be available if requested by an authority.
Personal Visits: If debts remain unpaid despite initial efforts, agents may visit the borrower personally, but such visits must be pre-informed.

Code of Conduct for Recovery Agents
The RBI has established a code of conduct for recovery agents to ensure they act courteously and fairly: Borrowers should be contacted at a place of their choosing. Agents must identify themselves and their authority at the first instance.
The privacy of the borrower must be respected at all times.
Interactions should be conducted in a civilized manner.
Agents must honor any request to avoid calls at particular times.
All interactions, including the time, number of calls, and content, must be documented.
Agents should assist in resolving disputes.

Lenders are responsible for the actions of their agents and must ensure that lawful and ethical methods are used during the recovery process. Any changes in the assigned recovery agent must be promptly communicated to the borrower, with the new agent carrying proper identification and notice of appointment.

Tips to Avoid Recovery Agents at Your Doorstep
To prevent recovery agents from visiting your home, consider the following tips:
– Timely Payments: Always pay your EMIs on time. Avoid delaying repayments if possible.
– Financial Planning: Create a financial reserve to use during difficult times and use it to stay out of debt.
– Communication: Keep an open line of communication with your lender. Inform them of any unforeseen circumstances that may affect your ability to pay, which can build trust and understanding.
– Responsiveness: Do not ignore calls or meetings with agents. Be honest about your payment capabilities and avoid making unrealistic promises.

Seeking Help and Support
If you find yourself in a debt trap, remember that help is available. Seek assistance from lenders, family, friends, and debt settlement professionals. The RBI monitors the conduct of lenders and recovery agents to ensure borrowers are treated fairly. With the right knowledge and support, navigating the loan recovery process can be less daunting.
If you are facing harassment from recovery agents, register and talk to our counsellors for support.

Conclusion
The loan recovery process can be challenging, especially in the aftermath of the pandemic. By understanding the process, maintaining communication with lenders, and managing your finances wisely, you can navigate this difficult time more effectively. Always seek help if needed and stay informed about your rights as a borrower.