ICICI pays Rs. 5.5 million as fine

The State Consumer Commission has fined ICICI Bank, India’s largest private sector bank Rs. 5.5 million for trying to recover vehicle loan by hiring goons. The incident highlights the irregular methods employed by banks through its recovery agents. State Consumer Commission President J D Kapoor observed; “ Collection Agreement executed between bank and collection agency is an independent agreement and a consumer has no concern in it.” He held ICICI bank guilty of grossest deficiency in service and unfair trade practice for breach of loan agreement by seizing the vehicle illegally. Out of the fine of Rs. 5.5 million, Rs. 5 million is to be deposited in favour of State Consumer Welfare Fund and 0.5 million has to be given to the complainant for sufferings caused by bank agents because of which a youth was hospitalized for more than a fortnight and received 17 stitches on his skull and back. The Reserve Bank Of India (RBI) had recently given warnings to banks on employing recovery agents on the basis of increase complaints of harassments from consumers. The Government has written to RBI expressing concerns. A few years ago, the government and RBI was trying to construct a lender liability law but had to settle on a code of conduct. The finance ministry recently held discussions with the US government officials on the lender liability practices followed in US and is expected to study the practices of other countries before proposing a bill in the parliament.

Presently consumers have only one option of approaching the banking ombudsman across country. Unfortunately this is a mockery of consumer rights by the banks because the retired officers who are appointed to this office in reality lacks authority to penalize the banks. If the lender liability law materialize it would provide penalties including monetary, for banks levying hidden charges or sitting on un-due certificates. Fortunately the huge amount of consumer complaints have at last shook up RBI and the regulator have threatened banks using legal option to crackdown unfair practices and employment of “muscle men” as recovery agents.