Module: | KYC, NPAs, Advances & Investment Valuations
Q210: Consider the following statements regarding the engagement and authorisation of recovery agents by commercial banks:
1. When forwarding a recovery case to an agent, the bank must inform the borrower via a formal written notice, and any subsequent change of the agent requires immediate notification.
2. A bank is strictly forbidden from forwarding a case to a recovery agent if a grievance is pending, unless there is concrete evidence the complaint is frivolous or vexatious.
3. Recovery agents must carry an authorization letter containing the direct contact details of the bank's grievance redressal officer when initiating the recovery process.
4. The Reserve Bank of India lacks the statutory power to impose a jurisdictional or functional ban on a bank from engaging recovery agents; it can only impose monetary penalties.
Which of the statements given above is/are correct?
2. A bank is strictly forbidden from forwarding a case to a recovery agent if a grievance is pending, unless there is concrete evidence the complaint is frivolous or vexatious.
3. Recovery agents must carry an authorization letter containing the direct contact details of the bank's grievance redressal officer when initiating the recovery process.
4. The Reserve Bank of India lacks the statutory power to impose a jurisdictional or functional ban on a bank from engaging recovery agents; it can only impose monetary penalties.
Which of the statements given above is/are correct?
✅ Correct Answer: A
The correct answer is A. Statement 1 is correct: The operational guidelines mandate transparent communication, requiring banks to send a written notice detailing the assigned recovery agent, including immediate updates if the designated agent changes.
Statement 2 is correct: The regulatory framework provides a protective shield to borrowers, strictly prohibiting the deployment of agents while a formal grievance is active, barring exceptional cases of proven vexatious complaints designed merely to delay the recovery process.
Statement 3 is correct: The rules enforce accountability by requiring agents to carry an ID, recovery notice, and an authorization letter explicitly displaying the bank's grievance officer's direct contact information.
Statement 4 is incorrect: The banking guidelines explicitly grant the regulator the severe statutory power to impose a ban on a bank from engaging recovery agents in a specific jurisdictional area or functional capacity for a limited period due to abusive practices.
Statement 2 is correct: The regulatory framework provides a protective shield to borrowers, strictly prohibiting the deployment of agents while a formal grievance is active, barring exceptional cases of proven vexatious complaints designed merely to delay the recovery process.
Statement 3 is correct: The rules enforce accountability by requiring agents to carry an ID, recovery notice, and an authorization letter explicitly displaying the bank's grievance officer's direct contact information.
Statement 4 is incorrect: The banking guidelines explicitly grant the regulator the severe statutory power to impose a ban on a bank from engaging recovery agents in a specific jurisdictional area or functional capacity for a limited period due to abusive practices.