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Role of collection agents in banking loans discussed

The High Court of Kerala has ruled that resorting to strong arm tactics to recover loans by Banks and other Financial Institutions is unlawful The court was considering an appeal filed by a recovery agency against a nationalized bank [Smart security secret service agency v State Bank of India (R.S.A No:46/2011)]seeking payment of commission duty for its assistance, towards a loan recovery. It was averred that the bank refused pay the charges, after a borrower had voluntarily settled the matter. The appellant relied on the agreement clause with the bank which mandated commission duty on every recovery duty assigned to it. The lower court allowed the plea of the appellant, which was reversed the appellate court. Hence he approached the High Court.

Article referred: http://www.livelaw.in/engaging-musclemen-recover-loans-unlawful-kerala-hc/

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