If a recovery agent knocks at your door you don’t have to hide in your house or avoid them by asking one of your family members to speak to them. They cannot harm you or force you to pay the outstanding at all.
The RBI has issued strict guidelines to protect the interest of the borrower and to stop unethical practices of recovery agents. You will find here the RBI guidelines towards recovery agents: how agents should approach, the time they can visit, and how they should behave.

Approach of Recovery Agents
The RBI states: “To ensure due notice and appropriate authorization by the banks, they should inform the borrower the details of recovery agents engaged for the purpose, while forwarding default cases to the recovery agents. The details should include their telephone numbers, etc. The recovery agents should call the borrowers only from telephone numbers notified to the borrower.”
This clearly indicates that if any recovery agent approaches you without following the above guidelines you should not entertain them and if they try to harass you, you can make a complaint to the police and also to the Banking Ombudsman. The bank also has the responsibility to keep the borrower informed in case the bank has changed the recovery agent. “Where the recovery agency is changed by the bank during the recovery process, in addition to the bank notifying the borrower of the change, the new agent should carry the notice and the authorization letter along with his identity card.” - the RBI guideline states.

Time of Call
The recovery agents are allowed to call the borrower only between 7 am to 7 pm. It’s as per the Code of Bank’s Commitment to Customers which banks have to abide by. In addition, visits are strictly prohibited by the code in the case of bereavement in the family or calamitous occasions - “Inappropriate occasions such as bereavement in the family or other calamitous occasion the family would be avoided for making calls visits to collect dues.”

Behavior of Recovery Agents
The recovery agents are not allowed under any circumstances to thrash the borrower or speak indecently. If the borrower does not to want to speak to the agent, the agents have to obey. “The bank and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.” - states the RBI.

An important point here is to note that in case you have already lodged a complaint for any of your grievances, banks cannot send recovery agents for that specific issue. The RBI states “Where a grievance/complaint has been lodged, banks should not forward cases to recovery agencies till they have finally disposed of any grievance/complaint lodged by the concerned borrower.”

Another familiar gripe - A little outstanding amount remaining on the credit card because of bank’s mistake, bank promises to waive off the amount and close the account.

But, surprise! The account has remained open, accruing interest. In a fairly new twist to this scenario, the bank now proceeds to divert payments made to credit card account to the customer’s loan account. Result? Outstanding dues in both accounts. Long term result? Credit card applications being rejected, loan applications being rejected…

The customer is not willing to pay the remaining amount because, he thinks, rightly, that he shouldn’t be left holding the baby because the bank screwed things up. And he asks, very sensibly, what are the guarantees that the bank will act towards removing his name from the defaulters’ list? (which, by the way, the bank cannot. Once your name appears on the defaulters’ list, it is there to stay for the next seven years.)

The answer to all this is not calculated to have customers such as the one mentioned above burst into song. The best way to deal with this kind of blatant chicanery is to indeed pay the outstanding amount up first. The more one delays, the more it affects the credit ratings. Once this is done, one should register a complaint on the bank’s website. And if one does not receive a satisfactory response within 2-3 weeks, approach the Banking Ombudsman with your complaint. Details on how to do this are available on the site - www.bankingombudsman.rbi.org.in.

Interest rates on loan can be changed, easily. Just read the agreement.

In case of floating interest rates, take rate change for granted. I read a clause in a home loan agreement of one of India’s largest private sector bank. The clause is that this rate of interest is linked to what is known as its Floating Reference Rate (FRR). And, the bank holds the right to change it at its sole discretion. The bank also holds the right to increase or decrease the EMI at its sole discretion. It’s called adjustable interest rate anyway!

What about fixed rates? I have read that banks do offer something called a fixed rate but then there is a rest clause attached to it. In the agreement terminology, it is known as “Fixed rate of interest with money market conditions.” (This is how ‘fixed’ your interest rate really is). The clause in the agreement goes something like this:

“From time to time, ___ Bank may, in its sole discretion, alter the rate of interest suitably on account of change in ___ Bank’s internal policies or if unforeseen or extraordinary changes in the Money Market Conditions take place during the tenure of the Facility. Thenceforth, the rate of interest varied as aforesaid shall be applicable to the Facility.
___ Bank shall be the sole judge to determine whether such conditions exist or not. If the Borrower/s is not agreeable to the revised rate by ___ Bank then within fifteen (15) days of the receipt of the notice from ___ Bank intimating the change, the borrower (s) shall be entitled to ___ Bank to terminate the Facility and prepay Facility and all the amounts due to ___ Bank in full in accordance with the provisions of the Facility/Agreement relating to prepayment.”

Basically, the bank allows it unlimited wriggle room to increase rates as and when they damn well please. Not that they do that, but they have legal immunity built in because of the clause.

Do not be surprised if your loan application is rejected even after you have paid off your much due credit card outstanding balance. The bank might have called you and given you an option where you could just pay a specified sum, in return for a settlement letter. Once you do that and get the settlement letter, it doesn’t for a moment mean that the slate has been wiped clean. You apply for a personal loan or a home loan and the lender will simply let you know that it isn’t interested in lending to you because your name comes up in the Defaulters list on the Satyam or CIBIL list.

When you go in for a settlement, banks can and will legally report you as a defaulter - to the extent of the dues foregone by them - at the credit bureau. All details concerning your default stay at the credit bureau for 7 years. You must understand that you CANNOT remove your name from this defaulters’ list. It will be removed from the list only after seven years, provided you do not default on any subsequent loans (if you manage to get it, that is). What you COULD do is to try applying for a secured credit card - a card that is offered against your term deposits at the bank. This type of card is available at many banks. Build a good credit record with it. This will not remove your name from CIBIL defaulter list but it will improve your credibility in your credit report. This would also increase your chances of getting credit facility from various banks at decent terms in future.

The full story is at:
http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/Trail_fees_by_any_other_name_pinches_as_much/rssarticleshow/3299673.cms

The story is about MF houses charging illegal fees to their investors.
“In a bid to boost their profitability, several MF houses are now charging trail fees (even for direct investors) under the other expenses head, disguising it with names like miscellaneous marketing expenses or other operating charges,” says a financial planner, who is empanelled with several fund houses.
Why are the fund houses fooling the investor? This shows clearly that the MF houses are only looking at their own benefits. Why is the regulator silent on all these wicked strategies of mutual fund houses? Why is no action being taken? Why is SEBI not taking this seriously?
There will be people who might think that this is a small issue; but my dear friends, this is a very serious issue as the MF houses are eating up investors’ money. They are committing fraud as no one is stopping them. Not even the regulator! I would request all the people who read this to complain to SEBI about it.

The best way to avoid fraud is to know how the fraud occurs. Credit card fraud starts when the card is stolen or when the crucial information of the card is stolen. This includes name of card holder, the account number, expiration date, and verification/CVV code. Stolen cards should be reported quickly by calling the customer care department. But stolen information is difficult to trace and one can only know that the fraud has occurred when the bill statement. Ergo, one should also check bill statement carefully when it comes in.
Identity thefts on card are increasing these days. Identity thefts are of two types - application fraud and account takeover.

Application fraud refers to the fraud when the criminal steals your document to open an account in someone else name. The criminal may steal your important documents like utility bills and bank statements in order to build up useful personal information.

Alternatively they may create fake documents. In account takeover fraud the criminal may gather the information of a person’s bank account then the criminal calls up the bank as a genuine cardholder and ask the bank to send the mail to the new address. The criminal would then report the loss of card. And then once the criminal receives the replacement card, he/she can use it!

Skimming is another type fraud done on credit cards. It is typically done by the dishonest employee working with the merchant. In skimming the criminal uses a small electronic device which is known as skimmer to capture the magnetic strip data on the card. This is then transferred to another, duplicate, card. The duplicate card is then used for fraud purposes.
It is easy for the bank to detect this type of fraud. The bank can collect a list of all the card holders who have complained about fraudulent transactions. Then, it uses data mining to discover relationships among the card holders and the merchants they use.
For instance if a large no. of the afore-mentioned credit card holders have used a particular merchant, that merchant terminal or (point-of-sale device) can be directly investigated.

In case of application and account takeover frauds you don’t have to worry much. If any unsolicited card is activated without the consent of the recipient the central bank has said that the issuing bank has to reverse the charges. Plus, they (issuing bank) would be required to pay a penalty twice the amount of the charges reversed. All you must do is to report a complaint at the issuing bank. If you do not receive a satisfactory/any response within 2-3 weeks, please approach the Banking Ombudsman. The details are available at www.bankingombudsman.rbi.org.in.

The aim of writing this article is to help the merchant as well as the customer to avoid risk present in the customer not present (CNP) fraud. Here we will carefully learn how the CNP process works to avoid CNP-related frauds in the future. CNP transactions happen with the card holder not present at the point of sale. Here the card holder’s order is taken by the merchant over the phone, email, or by fax. The merchant is unable to check the identity of the credit card holder. CNP transaction is thus the most risky for both card holder and merchant. Criminals can take undue advantage of this by using fake personal details by illegally obtaining your card information.

During the CNP process the merchant request authorization from the bank to process the sale transaction. The bank verifies that the card is not stolen or lost, and checks whether the card carries enough funds or not, and then gives the go-ahead to the merchant to proceed with the transaction. Now, if the transaction results in a fraud, the full amount has to be paid by the merchant. And the card holder whose card has been used for fraud purposes comes to know only when he/she gets the bill statement. So….check your bill statement as and when it comes in. If you find any fraudulent transaction, report to your bank immediately. In CNP frauds, the card holder is still safe as the bank would not hold the card holder responsible. The merchant is not so lucky. It has to pay from its own pocket whatever the fraudulent transaction amount is. So what’s the solution to avoid it for both the card holder and the merchant?

• Merchants should avoid CNP transactions as a matter of course.
• If they intend to do it, they should do these transactions only with clients who they know well; which means they can recognise the client’s voice properly. Even in such cases, they should avoid the transaction at the first hint of suspicion.
• Card holders should not share their credit card details with anybody; not even with friends.

Before I start writing about this issue, let me clarify I am not going to write about cultural differences or practices. And, if you think these are unrelated variables, think again.

One of my cousins wanted to sell off her flat in Juhu. These were times when real estate will on a high. She didn’t find it hard to get a buyer. Well, there was just this one small problem. The society said that it would not give an NOC of the buyer was a Muslim or a Christian. No more reasons given.

I live in a Thane suburb which is almost cosmopolitan. But, in the last three odd years I have seen some changes. I see boards at buildings such as ‘Jains preferred’. ‘Only vegetarians allowed’.

Another friend of mine wanted to move into a building with her family. She was a non-vegetarian. No board in this building. Nothing was said. But, she didn’t get the house.

I thought these were solitary instances, till I read some reports in a daily. The report said that a board outside an under-construction building on 12th road, Khar, says ‘Only Gujarati Hindu vegetarians allowed’.

This sure can be seen as an act of discrimination, but there is no punishment for public display of buyer preferences. In fact, some buyers can see this preference as an add-on service.

There’s another friend of mine who lives in the Andheri suburb in Mumbai. Most of the residents of that particular building belong to a particular religion and have set eating habits. My friend consented to not cooking non-vegetarian food in the house tat she had rented in the building. She has to hide and cook or have non-veg!
So, if you’re looking for a house, you better be with a family and well, ‘preferably’ a vegetarian and a… this list will only keep getting longer…

http://economictimes.indiatimes.com/Personal_Finance/Insurance/Insurance_news/IRDA_to_make_ULIPS_more_affordable/articleshow/3510476.cms

ULIPs were sold like hot cakes in the Indian markets till the downturn in the equities markets recently. The insurance companies are allowed to pay a maximum commission of 40 per cent of the first year premium, 7.5 per cent in the second year and 5 per cent thereafter. But after the fall in equity market since the beginning of this year, ULIP sales have gone down drastically. Looking at this scenario, the Insurance Regulatory & Development Authority (IRDA) has finally decided to reduce the commission rates to make the product more affordable and more attractive.

The step taken is very much in interest of the investors, but IRDA realized the same after the sales declined hugely. If the markets were not that choppy, would the IRDA have thought of the interest of the investors? Highly unlikely.

Does the regulator think about investors only when there is a crisis?

For some of us, who have seen the recently released movie EMI, newspaper reports about recovery agents may seem to be some sort of a controversy set to malign the profession and the banks involved. ‘Sattar’ in the movie might as well be confused with some angelic figure; falls in love with a debtor, Prerna… bye bye Prerna’s debt…

In real life, recovery gents, the process, and the very fact that you are a defaulter can be a serious pain in the posterior.

How do banks recover loans?
Banks have appointed special recovery agencies for loan recovery. These agencies could be either on contract or commission.
Some banks may start the process of loan recovery after a single defaults, other may wait for at least two such instances. The process begins with calls to the borrower. And, what follows is the field recovery process, which involves face-to-face interaction.

Are there any rules for recovery agents?
We have read countless newspaper reports about how the recovery agents come to a defaulter’s house or office at all god-forsaken hours. A bank’s representative is to contact the borrower between 7 am and 7 pm, unless one needs to visit a borrower at odd hours and occasions such as continuous irregularity in the accounts.
Agents also should avoid making calls or show up to meet the person concerned on inappropriate occasions such as mourning in the family or such other occasions for making calls/visits to collect dues.

The agents are required to carry proper identification and carry the concerned bank’s or agency’s authority letter. The agent should display the letter as and when required.

Before the recovery agent is sent across, the bank needs to have given sufficient notice (as prescribed by law) to the borrower before the filed recovery process is initiated. These are just a few of the guidelines.

Notorious Fame
What is it that the ‘agents’ are famous for?

Most agents are known to threaten people and verbally abuse and threaten the defaulters, despite bank’s directions. Some may threaten or actually use third-degree treatment on the borrowers.

Lucky, a recovery agent from Delhi told CNN-IBN in an interview that some recovery agents not only used lathis for recovery, but also their Mausers. These agents may stop a defaulter’s car on gunpoint and beat him up.

These recovery agents are not on any bank’s rolls but stand to get a hefty cut of booty they help recover.

Another recovery agent decided to take law in his hands and turned robber to recover the loan. In September 2008, in Pune, recovery agent Nitin Narayan Chavan robbed Gita Buremukla (25) of jewelry worth Rs 35,000.

This HSBC Bank recovery agent met Buremukla and informed her that there was a loan outstanding. She informed him that the person who had taken the loan no longer lived on the address, a Mr. K. Rambabu.

That didn’t satisfy the agent. The agent came back the next day to Buremukla’s house and entered it on the pretext of drinking some water. Note, recovery guidelines say that the recovery agent can’t gain forceful entry into a defaulter’s house.

Chavan locked the main door and threatened Gita with a knife and forcibly took her mangalsutra worth Rs 35,000.