ICICI Bank fined Rs500,000 for rough recovery methods

Mumbai: A consumer commission has ordered ICICI Bank, the country''s largest private sector lender, to pay a fine of Rs500,000 for use of force by the bank''s recovery agent on a defaulting customer. The client who defaulted on loan had approached the consumer affairs commission in Delhi complaining of use of force by the bank''s recovery agents.

He alleged the recovery agents impounded his vehicle and beat a friend''s son with iron rods, mistaking him as the defaulter.

The Delhi Consumer Commission has ordered the bank to pay the complainant, Tapan Bose, Rs500,000 compensation.

Other big lenders like Citibank and HDFC Bank have also dealt with consumer complaints about the strong-arm tactics of recovery agents. The banks often dismiss the recovery agents when confronted with such complaints.

Earlier, an ICICI Bank customer in Mumbai committed suicide after alleged harassment by recovery agents. The bank later paid his family compensation of Rs15 lakh.

Banks suffer the highest default rates on its "small-ticket personal loans" that are usually below Rs50,000. The rates of default on these loans are 10 per cent, compared to 2 per cent for credit card defaulters and 1.5 per cent for car loans. The bank is reducing its exposure in the segment--it now has around 3 million such loans. Banks often run into trouble when recovery agents target defaulters for these recoveries.