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| Details |
Case Code: CLBE001
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| Case Length: 3 pages |
| Period: - |
| Pub Date: 2008 |
| Teaching Note: Not Available |
| Subject : Business Ethics |
| Price:Rs.100 |
| Organization :-- |
| Industry : Banking and Financial Services |
| Countries : -- |
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Tactics to Recover Banks Loans in India Raises Ethical Concerns* |
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| Customers and the public were crying foul at the increasing instances of high-handedness by banks’ recovery agents. They alleged that the banks were hard selling their financial products, but in cases of default by customers they were using unethical methods to recover their loans. The policy makers too woke up to this problem and issued guidelines and directives as a crack-down on the banks adopting unethical tactics to recover their loans.
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Issues: |
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- Ethics and social responsibility.
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| Introduction |
In September 2007, Prakash Sarvankar, a customer of India's second largest bank, ICICI Bank, committed suicide after being publicly humiliated by the bank's loan recovery agents. ICICI Bank was compelled to pay Rs. 1 million in the form of a fixed deposit as compensation to the victim's family.
In a similar incident, another customer Yadaiah from Hyderabad died of a cardiac arrest after the recovery agents forcibly tried to recover a personal loan of Rs. 15,000 from him. ICICI Bank ended up paying a compensation of Rs. 0.3 million to the victim's family. In November 2007, the Delhi State Consumer Dispute Redressal Commission fined ICICI Bank Rs. 5.5 million after ICICI Bank's recovery agents hired goondas to recover their loan amounts. . |
| Questions for Discussion: |
1. Discuss the rationale behind the launch of ShareIdeas.org.
2. Discuss the significance of mobile communications in handling social and environmental challenges.
3. Do you think ShareIdeas.org is a social innovation? Give reasons for your answer. |
Keywords |
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Hard selling, financial products, unfair trade practice, Reserve Bank of India, RBI, Consumer Commission, ICICI Bank, recovery agents, loan defaulters, Housing Development Finance Corporation, HDFC, Indian Banks Association, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, SARFAESI Act, Security Interest (Enforcement) Rules, 2002, Lok Adalat, Indian Institute of Banking and Finance
* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US
$16) per copy.
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