If banks have to recover outstanding loan amount, the same has to be recovered in accordance with the procedure established by law. Coercive method of recovery by private agents, if appointed by banks, is not permissible. The banks certainly cannot use muscle power to recover the loan amount, the Madras High Court observed on Friday.
Disposing of a public interest litigation petition alleging coercive methods being used against farmers, the first Division Bench of Chief Justice S.V. Gangapurwala and Justice P.D. Audikesavalu wrote: “No muscle power can be exercised by the agents. If coercion is employed, then certainly the agriculturists will have every right to approach the police authorities.”
The judges recorded the submission of advocate Chevanan Mohan, representing Reserve Bank of India, that the Central bank had already issued ‘Guidelines on Fair Practices Code for Lender’ making it clear that all banks must resort to only legal means to recover dues and take serious note of complaints received against recovery agents.
