Watching the gruesome footage of a badly-beaten up person on a local TV channel upset me. And momentarily angry. I suppose my reaction was proof that the channel succeeded in achieving what it intended.
Apparently, the fateful guy nursing his wounds–head, waist, and legs completely bandaged, and face barely visible–in the hospital had defaulted his loan EMIs to ICICI Bank.
Victim’s wife Lakshmavva said, “They came and started knocking him. I heard them speaking. I asked who is there? One of them said we will break down the door. I said don’t do that I will open it. As soon as they came in they started attacking us with long swords. My husband was sleeping on the cot and before he could even get up they started attacking him. They hit my children and hit me too. There are blood stains in my kitchen floor.â€
All this drama, ironically, over the princely sum of Rs 4000.
This isn’t the first case where private banks and credit card companies have sent thugs to “recover” dues. It certainly won’t be the last at least for some time.
The local news channel thundered about the ghastly incident and, as is the wont of such channels, went on a generalizing spree–all private banks are evil, don’t deal with them. And how the poor man had actually paid his dues on time but the bank’s accounting guys were idiots. And on and on.
Sending goons to recover a loan isn’t done in polite society: ICICI bank is not a loan shark, a la Corelone. But the fact that they have done this also reveals many interesting facets.
ICICI Bank, which went on a massive expansion spree was unforgivably shortsighted about its ability to sustain what would surely follow. Like other banks, it desperately needs customers. And when they came in by the millions, it found that their customer support system was either non-existent or woefully inadequate: Angry exhibits 1 and 2 (link courtesy, the redoubtable MadMan).
I’m amazed that all the brilliant geniuses at ICICI Bank don’t realize that they should reduce their marketing blitzkrieg–all those nerve-wrecking “amazing deal” calls 3427923744 times per day–and concentrate on setting up their infrastructure at least now. I’m more amazed that before issuing those no proof/documentation, spot sanction pronouncements, they don’t consider the borrower’s repayment ability. And when the cheques start a-bouncing, they send out ruffians even in cases–assuming the poor guy I alluded to above had not defaulted–where the bank is at fault to begin with! Neither sensible nor responsible unless you justify this braindeadedness at the altar of the stock market–ICICI Bank was doing a whopping Rs.944 just last month.
Perversely, these banks have provided an indirect legitimacy to the underworld. In Bangalore, some of the “recovery agents” are derived from among the finest stock in the Bangalore underworld. In their earlier avatars, these toughs were the dreaded loan sharks. Ever since they realized that it is more profitable to work on behalf of private banks, they’ve switched careers. Almost every commerical complex in Bangalore has a “Collection Agency” office, a front for such dirty work.
Neither is this the first time ICICI Bank has landed with an egg on its face. A mere four or five days ago, no less than the Supreme Court had severely rapped ICICI Bank.
Describing the recovery agents employed by the Multinational Banks (MNBs) as thugs, hooligans and gangsters, the Supreme Court on Monday held that this country is governed by the “rule of law†and the banks cannot employ goondas to take possession of property or vehicles by force.
This is not to single out ICICI Bank for treatment but it tops the list, and its latest misadventure is fresh in memory.
I recall a training session I attended 3 years ago. The trainer used this selfsame example and said that if any bank sent goons in the US, its business would simply evaporate in no time. He said, further that no bank in the US can refuse loan to anybody who sought it. But, he said, banks are smarter. They simply levy such astronomical interest rates that the loan-seeker would gasp in horror just looking at the EMI he’d have to pay if he took the loan. I thought that was a smart tactic. Nipping in the bud and all. However, if a (existing) customer defaulted, banks would consider going to court as the last option. They’d counsel the customer, work out a detailed recovery plan–maybe reduce the EMI and increase the duration, stuff like that.
We can’t do that here simply because of a fundamental flaw: our legal system, which resembles manholes in Bangalore. Always overflowing, eternally stinking. In other words, contract enforceability is almost impossible in this country.
The other interesting aspect is that we have failed to erect adequate support systems in tandem with changed conditions. Liberalization doesn’t end with signing a few important papers. Gurcharan Das, in his lively India Unbound, writes delightfully about Liberalization process but rues the sluggishness that followed after the papers were signed. It doesn’t help that the present government has even dropped its earlier pretensions to furthering the economic reforms, which ironically, our present Prime Minister had worked hard to set in motion.
Postscript: This is a great scoring point for Socialists to proclaim, see, we said it wouldn’t work! Privatization is evil, and the rest. Farmer suicides in Vidarbha is a case in point: the long term solution is reforms but the Socialist solution is perpetuating subsidies.
Crossposted in Desicritics and INI Signal.