Guidelines for Recovery Agents Engaged with SHCL


The housing finance sector has witnessed radical changes in recent times in all spheres of its activities which include the recovery mechanism implemented by Housing Finance Company (HFC) to ensure that the monies owed to the HFC are recovered from the erring borrowers.

As a matter of general practice and for the purpose of recovery, the responsibility of recovery is sometimes conferred on “Recovery Agents/Collection Agencies” who are primarily engaged for this specific purpose and on whom the sole responsibility is to facilitate collection of the amount receivable from these erring borrowers.

However, it has come to the fore that on account of lack of experience & training, setting of stiff recovery target and/or offer of high incentives/commissions etc. entice the Recovery Agents /collection agencies/authorized representatives (employees of HFC or designated representatives) to use intimidating and questionable methods which have led to a spate of events wherein the borrower’s have been harassed to the extent of committing suicide.

Taking serious note of the reports on the high handed action, Reserve Bank of India (RBI) has come out with a draft guideline for engagement of Recovery Agents / Collection Agencies by Banks. On similar lines National Housing Bank (NHB) has prepared a guideline for engaging of Recovery Agents /collection agent by HFCs to control the occurrence of such uncivilized and unlawful process of recovery and further to reinstate confidence amongst the borrowers.

Objectives & Highlights

At the core of the issue is the sincere endeavor of the regulator to ensure formulation and adherence of strict norms for recovery by the RAs/collections agencies/authorized representatives (employees of HFC / designated functionaries).

The guideline encapsulates amongst others, the following parameters:
  • Evaluation of the process of engagement along-with imparting of proper training to the RAs/Collection Agencies/Authorized Representatives (hereinafter referred as RA for convenience);
  • Contracts to RAs & others do not induce adoption of uncivilized and questionable behaviour or recovery process;
  • Transparency, by notifying the borrowers to the extent possible of the engagement of RAs and the process thereof;
  • Ensure that the recovery process strictly abide by the codes pertaining to collection of dues;
  • Introduction of mechanism whereby the borrower’s grievances with regard to the recovery process can be addressed;
  • Promote a fair and cordial relationship between customer, the intermediary/ies and the Company; and
  • last but not the least refrain/restrict degeneration of society on account of the unlawful, unreasonable and irresponsible mechanism adopted for collection of dues and thereby foster confidence in the society and the system.
Application of the Code
SHCL on its part lends money responsibly after ensuring (to the extent possible) that the applicants/borrowers have the capacity to repay the amount advanced.

The company currently does not seek the services of RAs/external agencies for the job of collection of over-dues which alternatively is satisfied with the help of the employees of the company. Nonetheless, in keeping the long term perspective of the issue the company will ensure implementation of the “Guidelines for Recovery Agents” which is the responsibility of the entire organization.

Stages of Identification, Engagement & Termination of RA
  • The company will put in place a procedure for engagement of RAs which shall be structured to cover the process of identification of the entity (firm/company/individuals) involved in the recovery process, verification of antecedent of their employees, past record, experience etc. The process of finalization of a RAs shall be monitored at the highest level at Corporate Office and periodically reviewed.
  • Imparting of periodic and continuous training to handle the borrower with care and sensibility, their responsibilities and limitation with respect to hours of calling, privacy of customer, decency & decorum, resolution of differences in mutually acceptable and orderly manner.
  • Once implemented by Indian Banking Association (IBA), to employ/engage only such personnel/agencies who have undergone the certificate training course on Direct RAs conducted by the Indian Institute of Banking and Finance (IIBF) with minimum 100 hours of training. Further ensure that all pre-existing RAs avail the training within 1 (one) year of implementation.
  • Provide the RAs with proper identification card / authority letter / copy of notice for the purpose of easy identification and convenience of the borrower.
  • Update the website with the details of the RAs engaged by the company.
  • Contracts with the RAs should refrain from inducing them to resolve to uncivilized, unlawful and questionable behaviour, act or recovery process.
  • The above parameters shall even cover (to the extent required) the employees of the company who have been conferred the task of collection from borrowers.
  • In the event of termination of the agreement/contract with any RAs, the same shall be publicized for the information and convenience of the borrowers.
Commitment to Customers

The Company shall ensure that monies owed by the borrower/s are recovered while maintaining their dignity at all times and within the framework of the law of the land. Further that all dealings with customers rest on ethical principles of integrity and transparency.

In essence we will be “FIRM & FAIR” in our loan recovery process and mechanism.

To give effect to the loan recovery guidelines which at SHCL shall rest on the pillars of fairness, transparency, best of corporate practice & ethics and firmness, the following broad parameters have been identified:
  1. Correctness of Information
    • The company shall make every attempt to ensure correctness of information regarding the outstanding position of the customer prior to making contact with the customer regarding recovery of outstanding dues.

    • Only after the company has ensured to the best of its ability that the information regarding the borrower account is correct will the company contact the borrower through the prescribed means.

    • If the borrower produces payment information that is contrary to that on the records of the company, the company will verify such information and revert to the borrower with a confirmation / non-confirmation of the same within a period of 10 (ten) working days.

  2. Contacting the Customer
    • The company shall ensure that the borrowers are made aware of the outstanding position of their loan accounts via either a telephone call or a letter sent to the customer’s address on record.

    • Tele-callers calling the borrower will at all times behave in a polite and civil manner and will maintain the decorum and dignity of the borrower.

    • All letters addressed to the borrower will follow the tenet of proper business communication and will be moderate and restrained in terms of the language used.

    • The company will make a note on record of the borrower’s response to the telephone call or letter and will take appropriate action as per the borrower response.

    • In case the borrower cannot be contacted on the telephone even after several attempts or the borrower does not respond to the company’s letter the company reserves the right to send an authorized representative to the borrower’s address on record (either residential or official).

    • The representative will at all times behave in a polite and civil manner and will maintain the decorum and dignity of the borrower. All representatives are bound to sign the “Code of Conduct” (Annexure A) that regulates personal interaction with the customer. This relates to
    • Appearance
    • Threatening Conduct
    • Abusive Language
    • Physical Proximity
    • Confidential

    • The borrower shall be informed of the forwarding of the case for collection to a RA and necessary details including the telephone number/s shall be intimated to the borrower.

  1. Method to be followed by the RA / Collection Agencies for Recovery

    The Company shall inform customers about the repayment schedule well in advance. However, if the customer does not adhere to repayment schedule, the Company must inform the customers by sending notice or by making personal visits and / or repossession of security if any.

    The Company’s collection policy should be built on courtesy, fair treatment and persuasion. The functionary appointed for the collection of the dues must follow the guidelines given below:
    1. 1 The functionary must identify himself / herself and display the authority letter issued by the Company and upon request, display his / her identity card

    2. Customer would be contacted ordinarily at the place of his / her choice and in the absence of any specified place at the place of his / her residence and if unavailable at his / her residence, at the place of business / occupation.

    3. Customer’s privacy should be respected.

    4. Interaction with the customer shall be in a civil manner.

    5. The Company’s representatives shall contact the customers between 0700 hrs and 1900 hrs, unless the special circumstances of the customer's business or occupation require otherwise.

    6. Customer’s request to avoid calls at a particular time or at a particular place shall be honored as far as possible.

    7. Time and number of calls and contents of conversation would be documented.

    8. All assistance should be given to resolve disputes or differences regarding dues in a mutually acceptable and in an orderly manner.
    9. During visits to customer's place for dues collection, decency and decorum should be maintained.

    10. In appropriate occasions such as bereavement in the family or such other calamitous occasions should be avoided for making calls/visits to collect dues.

  2. Recovery

    1. If after all attempts, the borrowers do not voluntarily repay the outstanding amount on the loan, the company reserves the right to initiate legal proceedings for recovery of the amount outstanding.

    2. The company remains committed to upholding the law of the land and will initiate procedures such as repossession / attachment etc. only under a strict legal compliance framework. Even at the time of repossession / attachment the company shall make all attempts to maintain the dignity of the borrower.

    3. The company would generally initiate repossession of the asset, if the default committed is more than 90 days. However on exceptional bases the same can be initiated on lesser default.

    4. The company would intimate the borrower before auction of the repossessed asset to foreclose and pay the amount and take back the asset. The company would need a maximum of 10 (ten) working days for returning the said asset after the foreclosure.
Complaints Regarding the Company’s Employees & Representatives.
  • The company shall govern and regulate the behaviour of its staff, as well as third parties acting on behalf of the company, to ensure that the policies and codes of the company with respect to recovery of outstanding loans is adhered to at all times.
  • The company will ensure to the extent possible that it does not directly or through its agencies hire people with criminal records and backgrounds or any other anti-social elements as collection agents.
  • Wherever the company comes to know that persons with criminal record or anti-social elements are working in a collection agency the company will take appropriate remedial steps to ensure that such elements are forthwith removed. The company will also issue a warning to the collection agency in question. If the collection agency in question continues to use persons with criminal record and anti-social elements the company reserves the right to terminate the services of such an agency.
  • The company has a grievance mechanism in place and complaints can be made on the website or by contacting the company in person, telephonically or via a letter.
  • Borrowers have the right to demand a complaint no.
  • The company shall deal strictly and expeditiously to ensure that all complaints against the HFCs employees and / or its representatives are investigated completely and appropriate action is taken, if required.
  • Complaints will be attended & amicably settled as early as possible
  • In case a customer is not satisfied with the way a complaint is handled, the Company will guide the customer on how to take the complaint forward
  • The Company will reverse any charges applied to a customer’s account due to an error on our part.

  • Procedures for Registering Complaints / Grievances

    If at any stage, if a customer is not satisfied with the service given to him/her, he/she can to contact the Company. The customers’ first point of contact for redressal of any complaint will be our Branch Head who are fully capable of redressing customer grievances satisfactorily. If he/she does not receive a reply within 7 working days from the Branch Head, or if he/she is not satisfied with the reply received him/her, the customer can write to our Corporate Office, to the:

    Shri D.J. Bagchi (CEO) / Shri Vivek Kapoor (Corp Manager – Corp. Affairs)
    Sahara Housingfina Corporation Limited,
    Sahara India Sadan, 2ª Shakespeare Sarani, Kolkata – 700 071.
    (033) 32984850

    If the customer does not hear from the Company within next fortnight working days, or if he/she is not satisfied with the response, customer may write to the by the National Housing Bank to look into the provision of satisfactory service, if so desired by them.
  • The Internal Auditors of the Company shall be conferred the responsibility to assess the adequacy of the risk management practices adopted in overseeing and managing the outsourcing agreement with respect to the RAs.
  • The Company reserves to itself the right to alter/delete/add to these codes at any time without prior individual notice and such alterations /deletion/addition shall be binding on the customers
Place: Lucknow
Date: 31st July, 2008
  Privacy | Terms of Use | Trademarks | Licence | Newsletter | Partner with Us
Designed & Developed by Sahara Corporate Communications