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Fraud Alert: Harassment by Recovery Agents for Loan Not Even Obtained
Yogesh Sapkale 25 March 2023
Consumer Interest
A major issue that harasses consumers in India is the pathetic manner in which know-your-customer (KYC) is done by most financial institutions and service-providers and the coercive action they initiate without proper notice. For many companies in this sector, a document resembling Aadhaar is more than enough to on-board a customer and then link the account with (any) mobile number and email ID provided by the 'customer'. Is it any wonder that many of us continue to receive a message from finance companies for personal loans and credit cards which we may not even require, while some of us are facing harassment from recovery agents for loans they have not even availed? A recent case involving journalist Malini Bhupta highlights the severe nature of this practice. Someone linked her mobile number with a loan and when that person defaulted, recovery agents landed at her doorstep!
 
Unfortunately, her case is not an exception. There are too many cases of loan recovery agents landing at the doorsteps of people who are unaware of a borrower having misused their names or details in a loan application. In most cases, the defaulters provide your mobile numbers as a friend or as part of KYC requirements. 
 
In a series of tweets, Ms Bhupta said that "Bajaj Finance has been sending goons to my home to recover money lent to a man called Ranjit Kumar Jha. I do not know this man. I tried reasoning with the recovery agent but he insisted I find the defaulter or pay up. People kept landing up at my doorstep."
 
 
Many people responded to her tweets by narrating their own horrible experiences with recovery agents for loans they had not availed. 
 
One shocking case is that of the wife of one Karvendhan Ramasamy. He says someone used his wife's medical registration to obtain a loan of Rs22 lakh from Bajaj Finance. Even after registering a first information report (FIR), recovery agents continue to harass her. 
 
 
Another person, Vishwanath Jadhav tweeted that recovery agents from Bajaj Finance are harassing his daughter to recover a loan that she did not take.
 
 
 
Responding to Ms Bhupta's tweet, one Amit Sethi says his friend received calls for loan recovery from Bajaj Finance. “He also started getting loan approval messages from many lenders. I suggested that he should immediately check his CIBIL report. He was in for a surprise.”
 
 
While in all the above examples, the lender is Bajaj Finance; it is not the only lender with faulty on-boarding and poor verification processes. Most non-banking finance companies (NBFCs) or fin-tech-based lenders behave similarly when it comes to shortcuts to KYC and verification. They then use muscle power to recover loans, even from persons who have not borrowed money from the lender.
 
 
 
 
What can an ordinary person do in such a situation? 
 
Ms Bhupta says, "My lawyer tells me that litigation will not help and will take months or years. This means that companies like Bajaj finance will harass and send thugs to women's homes, and the system, police and laws can do nothing to them. Is this the future?"
 
 
As Mr Ramasamy mentioned, even after filing an FIR, his wife is being harassed for recovery of a loan which she had not obtained from the lender.
 
One Nikhil S, along with his mother and wife, was also receiving calls for someone else. He filed a complaint with the banking ombudsman that works under the Reserve Bank of India (RBI) and got his and his mother's numbers de-linked. However, his wife has continued to receive calls for the past one and a half years.
 
 
There are two primary reasons behind this recovery menace. First, the mobile number you are using may not be a new one and may have been used by someone else before you were assigned it. Mobile service-providers often recycle old numbers and assign them to new users to prevent number exhaustion. The previous user may have obtained a loan and then defaulted. However, since his mobile number remains unchanged in the records of the lender, you (the new user) would receive calls from recovery agents if there is a default. 
 
Before buying a new SIM (subscriber identity module), it is a good idea to check the number you have selected on a caller identity app like TrueCaller to find out about the previous user or if the number was used for telemarketing (it would be marked as spam in the app). 
 
Secondly, obtaining and discarding mobile SIM numbers is relatively easy. Mobile service-providers often accept only Aadhaar as proof of photo ID and residence for KYC. Unfortunately, there is hardly any verification or authentication of the information provided by the customer. This means it is pretty easy for fraudsters to obtain new SIMs and discard them, once their purpose is served. 
 
For example, neither the telecom regulator nor the service-provider wants to follow KYC strictly. The Telecom Regulatory Authority of India (TRAI) is least interested in consumer issues, while telcos are more than happy to just on-board more and more customers to boost their monthly subscriber numbers. 
 
If only both mandatorily followed strict KYC processes for new SIMs, then nearly 50% of the cyberfrauds originating from the infamous Jamtara and Mewat regions would come to a standstill. The next step would be to monitor and control the number of calls and SMS sent by new numbers, especially from the notorious regions. But I doubt if TRAI or any telco is interested in taking these steps. 
 
It also means that only RBI can take action against errant lenders who are harassing people for the recovery of a loan that they have not even obtained. Remember, last year in September, RBI restricted Mahindra and Mahindra Financial Services Ltd (MMFS) from using third-party services for loan recovery. It was done after a 27-year-old pregnant woman was crushed to death trying to stop a loan recovery agent, working on behalf of MMFS, from seizing her father's tractor over loan dues. 
 
Here is what you can do...
 
1. Whenever you receive a call from a recovery agent for a loan you have not availed, please record the conversation. 
 
2. If the recovery agent lands at your doorstep, do a video recording and preserve it.
 
3. Send an email to customer care with a copy to the nodal officer of the lender. You can also mark a copy to your nearest police station (you can find email details on the websites of the lender and police department).
 
4. Send a reminder after seven days.
 
5. If there is still no reply and no respite from the recovery agents, then escalate the issue with the principal nodal officer of the lender, marking a copy to the managing director (MD) and chief executive officer (CEO). 
 
6. If there is no response and you continue to be harassed by the recovery agents, file an FIR at your nearest police station and register a complaint at RBI's banking ombudsman here https://cms.rbi.org.in/. Do note that you are required to approach the banking ombudsman within 30 days of filing your first complaint.  
 
 You can also approach Moneylife Foundation (https://www.mlfoundation.in/ ) and seek help from our free legal helpline (https://www.moneylife.in/lrc.html#ask-question ) to escalate your complaint. 
 
 
How To Report Cyber Fraud?
 
Do report cybercrimes to the National Cyber Crime Reporting Portal http://cybercrime.gov.in or call the toll-free National Helpline number, 1930. To follow on social media: Twitter (@Cyberdost), Facebook (CyberDostI4C), Instagram (cyberdostl4C), Telegram (cyberdosti4c). 
 

 

Comments
yerramr
2 months ago
It is rare to find that a bank knows its customer by using KYC. It does not know even its pensioners!! Bank branches know only how to use the key board in front of them and not recognize that there is a customer across the counter. This is the fate in most banks. KYC is therefore a poor indicator.
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