Legal Correspondent

  • ICICI Bank asked to produce copy of RBI guidelines
  • Stay on arrest extended

    New Delhi: The Supreme Court on Tuesday asked ICICI Bank to produce a copy of the guidelines framed by the Reserve Bank of India and the Indian Banks Association on employing agents to recover loans from defaulters or seize vehicles purchased on loans.

    A Bench consisting of Justices A.R. Lakshmanan and Altamas Kabir gave this direction after senior counsel Mukul Rohtagi, appearing for ICICI Bank, said the guidelines provided for commercial banks employing agents to recover loans.

    The Bench disapproved of banks employing goondas to recover loans by threatening defaulters and their families. It cited several instances of the agents resorting to intimidation of family members.

    Criminal case

    The court was hearing the ICICI Bank's appeal against an Allahabad High Court order rejecting its plea to quash a criminal case registered by the Uttar Pradesh Government against the managing director and other top officials for allegedly using criminal force against a defaulter. The case was registered at the instance of the High Court on a complaint from a widow that the bank had sent musclemen to seize a vehicle for non-payment of one instalment of loan.

    When the Bench wanted to know about the procedure adopted by the banks, Mr. Rohatgi said notice would be sent to a defaulter asking him to either to pay the instalments or hand over the vehicle purchased on loan, failing which the agents would be asked to seize it. When the Bench pointed out that recovery or seizure could be done only legally, counsel said, "If we have to go through the legal process it would be difficult to recover the instalments as there are millions of defaulters."

    The Bench said, "You may have the right to recover the loans but you cannot send goondas to recover the vehicle. Sometimes since they get commission, the agents may resort to force and threat. We will have to stop this practice."

    Counsel said the court must lay down proper guidelines in this regard.

    The Bench extended the stay on arrest of the top officials pursuant to registration of the case. It posted further hearing for February 21.