*Debt Recovery Agent*
(DAY 1)
*DRA 2008
*DMP – Debt Management Plan (IBA, RBI, IIBF
*Definition of DRA
DRA is defined as person engaged by a bank for the purpose of collecting specified loan or
advances or other kinds of debts from debtors or borrowers in accordance with the specified
terms and conditions.
1.What is mean by BANK…?
Bank is a financial Institution which acts as an intermediary between savers & users of funds.
Bank has no full form because bank is a Latin word.
Bank is An institution that carries the business of Accepting money and lending money
Banking is a Business that carries out lending money and accepting money from public and the
Banking term has been defined in Banking Regulation Act 1949 section 5(b).
Banker is a person who engages the business of lending money and accepting deposits
Functions of Bank
Deposit taking
Deposit lending
Deposit investment
The Reserve Bank of India ( RBI ) is India’s central bank, responsible for the issue and supply of
the Indian rupee and the regulation of the Indian Banking System. RBI established in 1st April
1935. (That’s why financial year start from 1 April of every year.)
*SCHEDULED BANK*
Banks can be either scheduled or non scheduled. Banks which are listed in the second
schedule of the reserve bank of India act 1934, are known as scheduled banks. These banks
are required to maintain certain amounts with RBI and in return they enjoy the facility of financial
accommodation and remittance facilities at concessionary rate from RBI. A scheduled bank is
eligible for loans from the Reserve Bank of India at bank rate.
*Types of Bank*
There are two types of Banks
Commercial Bank
Co-Operative Bank
Commercial Bank
In Commercial bank there are five type of bank.
1. Public Sector Bank – These banks are characterized by majority ownership (51% or more
share capital) by the Government of India. It is a group of 27 banks. This group of 27 banks has
the largest number of branches in metro / urban / rural areas throughout the country. The group
contribute to about 75% of the total deposits and about 70% of total advances of all commercial
bank in India. About72% of the banking business in India is performed through these banks.
India’s first public sector bank or Nationalize bank is Allahabad Bank which is established in
1865.
2. Private Sector Bank – These are incorporated in India and their shareholdings are with the
public and large business houses. Less than 49% share held by the government. In the year
1993 all bank started modernize. Modernization means traditional method was converted in to
computerized method. ( After modernization customer started getting lots of facilities like net
banking, mobile banking, telephone banking, online fund transfer etc. ). After modernization in
the year 1996 ATM was started. Modernization also called CBS [ Core Banking Solution ]
method.
3. Foreign Banks – These are the banks incorporated outside of the India but granted license
by RBI to do banking business in India through the Indian Banks. They can’t open their
branches in India.
4. Regional Rural Bank (RRB) –Regional Rural Banks have been established with a focus on
rural development. These are also scheduled banks sponsored by public sector banks. Their
area of operations was restricted to 3 or 4 districts. They are small localized banks operating in
rural areas of some district. RRB’s have been opened by some big nationalized banks. Their
ownership capital is provided jointly by Central Government 50%, State Government 15%, and
the sponsor (public sector bank) 35%.
5. Local Area Bank- These are banks which have been given license to function in a given
area. They operate with a low level of capital and cannot offer all the financial services of a
commercial bank. These banks provide loans to the local customers for agriculture and its allied
activities. Capital local Area Bank, Jullundur got converted in to small Finance Bank in 2016.
2 Co-Operative Bank
Co-operative banks are registered under the Registrar of cooperatives and their main regulator
is The State Government. In case the cooperative banks operating in more than one state then
the regulator is Central Government. The Organizational structure and management set up of
cooperatives banks is based on cooperative principal. Co-operative banks size of assets/liability
is much smaller as compared to commercial bank. Cooperative banks operate on “ No Profit No
Loss” principle of cooperation.
There are three types of cooperative banks-
Urban co-operative bank
Agricultural co-operative bank
Land development co-operative bank
*Types of account*
There are four types of account
1. Saving Account:- Saving account can be opened by individuals for keeping saving for meeting their future money needs. Saving account can be opened by guardians (on behalf of their minor children) minors above the age of 10 years and below 18 years. Withdrawals are permitted on demand of the account holder. Banks put certain restrictions on the number of withdrawal per month/ quarter. The banks pay interest on the minimum balance maintained in the account during the specified period of every month, say from 10th to the last day of the month. Interest on saving bank account continues to be regulated by the Reserve Bank of India. It is 4% per annum and all commercial banks have to pay this rate on saving bank account.
The saving bank account of two types:
1. Accounts with cheque book facility:- In which withdrawal are permitted by cheque drawn in favour of elf other parties.
2. Accounts without cheque book facility:- Where withdrawal are permitted to the account holders only at the drawee bank branch by filing up a withdrawal form. In such accounts, third parties cannot receive payments.
Either or Survivor:- Only two individuals can operate account that is primary account holder and secondary account holder.
Former or Survivor:- In this account where only the former account holder, the first holder can withdraw funds from the account. Once the former account holder dies only then the second account holder will be able to withdraw funds.
Jointly all name : In this type of account, both parties must sign to access the funds.
2. Current Account:- Current accounts can be opened by individuals, business entities (firm / company), institutions, government bodies/ Department, societies, trust etc. There are no restrictions on the number and amount of withdrawal / deposits. All current accounts are non interest bearing and banks are not allowed to pay any interest to the current account holders. Current account get overdraft facility. Overdraft means instant loan. Payable on demand of the Bank. Interest is charged on daily basis. Interest rate is highest in personal segment.
3. Fix deposit (FD):- Fixed deposits are repayable on the fixed maturity date along with the principle and agreed interest rate for the period and no operations are allowed to the customer against the deposits. Fix deposits are accepted for specified interest rates as mutually agreed between the depositor and banker at the banker at the time of opening the account. Minimum period of Fixed Deposit is 7 days and Maximum period is 10 years. High value deposits and deposits of senior citizens (above the specified age normally 60 years) may be offered higher interest rate. The deposit receipt is not a negotiable instrument, nor is it transferable. Those term deposits which are held for periods of 6 months and less are called short Term Deposits or Short Deposits.
4. Recurring deposit account:- The customer deposit into the account fixed sum at pre-fixed frequency (generally monthly/quarterly) for a specified period. The interest rate payable on recurring deposit pre-fixed and it is generally a little lower than the fixed deposit rate for the same period. The total amount deposited along with the interest is repaid on the maturity date. Depositor can take a loan or advance against the deposits or to have the deposit pre-paid before the maturity. Minimum period of Recurring Deposit is 12 month and maximum period is 10 years means 120 months.
Demand deposits:-
Demand deposit which are repayable on demand by the customer.
(current account +saving account)
Term deposit:-
Term deposit which are repayable on maturity dates as agreed between the customers and bankers.
(fix deposit + Recurring deposit)
Hybrid deposit or Flexi Deposit:-
These deposits are a combination of demand and fixed deposits for meeting customer’s financial needs in a flexible manner.
ICICI Bank:- Quantum Deposit Scheme
*Types of customers*
Customer (Definition):-
A person who has an account in a bank is Considered as bank customer. The term “customer” of a bank is defined by Prevention of Money Laundering Act, 2005.
1. Individual Customer: -
Any individual who is major and sound mind can open a bank account. Any Individual person can operate bank account by specimen signature.
2. Illiterate Customer: -
Illiterate person means who cannot read and write. Illiterate person who cannot sign are allowed to open saving bank account. ( without cheque book facility ). Current account is not generally opened for such persons. Withdrawals are permitted in the account through withdrawal slip on production of the passbook and after verification of the thumb impression and against proper identification of the account holder.
3. Blind or other Disable Person: -
They can open and maintain any type of bank accounts .However ,following precautions are to be taken while opening and maintaining such accounts:
Various risks in operation of the account should be explained to the account holder
Joint account with close relative can be opened
Cash receipts and payments should be made in presence of witness preferably bank customer
Account opening from etc. should be stamped “blind person”
For withdrawal of the amount he/she should come personallypersonally
4. Sole Proprietor: -
It is a one man organization where a single individual owns, manages and controls the business.
5. Hindu Undivided Family (HUF) :-
As per the law where a Hindu dies, leaving a business it passes on to heirs and property becomes the joint Hindu Family property. The elder members is called ‘KARTA’ and the members (male as well as female) of the family are called ‘coparceners’. The account is to be operated by the ‘KARTA’ only. Death, Lunacy, insolvency of the members does not affect the operations in the account.
6. Partnership Firm: - A partnership is an organization which is formed with two or more persons to run a business with a view to earn profit. In banking business minimum 2 & maximum 10 member are required & in non-banking business 20 member are required.
[ Non-Banking Finance Company (NBFC) :- It provides loan but they are not bank.
7. Public Limited Company: -It has minimum paid up capital of Rs. Five lakhs.
It requires minimum 7 members and maximum no lim. it
8. Private Limited Company: - A private company is an ideal form of organization when a business is to be expanded at a large scale without involving large number of shareholdings groups. It has a minimum of two members and maximum of 200 members.
9. Trusts, Clubs, Co-operative Society: -
All clubs, trust, co-operative society get account in the bank.
10. NRI (Non Residents Indian) :-
They have NRA (Non Resident Account) in bank. NRA has 2 types of operating system.
NRO ( Non Residents Ordinary):- Where transaction are held in Indian Currency.
NRE (Non Residents External) :- Where transaction are held in Foreign Currency.
11. Kids Account :-
At present bank account can be opened for born child also. Minimum deposit 1 rupees with zero balance.
*Banker-customer relationship*
Debtor is Receiver
Creditor is Giver
1.Debtor - Creditor :-
When a customer deposits money with the bank, then the relationship is that bank become Debtor & customer become Creditor.
2.Creditor – Debtor :-
When Banks gives loans to the customer, then the relationship is that Bank become Creditor & Customer become Debtor.
3.Bailee – Bailor :-
When a customer deposits certain valuables, bonds, securities or other documents with the Banks, for their safe custody, then the relationship is that bank become Bailee & customer become Bailor.
4.Agent – Principle :-
One of the ancillary services rendered by the bank is remittances, collection of cheque, bills etc., on behalf of the customer. It further undertakes to pay regularly electricity bills, telephone bills, insurance premium etc. In all such cases, the banks acts an as agent and his principle being customer.
5.Lessor – Lessee :-
The banks provide safe deposit lockers to the customer who hire them on lease basis. The relationship therefore is that bank is Lessor and customer is lessee.
6.Trustee – Beneficiary:-
When a trust is created appointing the bank as a trustee, then the relationship is that bank is trustee and customer is beneficiary.
1. In case of customer deposit some amount in the Bank account is Debtor & Customer is Creditor.
2. In case of loan account Bank is Creditor & Customer is Debtor.
3. In the case of deposit of safe custody of valuables, the Bank is Bailee &
Customer is Bailor.
4. In the case of collection of bills / cheque, Bank is Agent & Customer is
Principal.
5. In the case of safe deposit locker, Bank is Lessor & Customer is Lessee.
6. Bank also functions as a trustee on behalf of the beneficiary customer. ]
*Types of Interest Rate*
What is interest?
Interest is the price that someone pays for the temporary use of someone else’s funds.
There are two types of interest rate
Fixed Interest Rate
Floating Interest Rate
Fixed Interest Rate :-
Under this scheme fix interest rate is payable during the entire duration of the loan.
Floating or Adjustable Interest Rate :-
Under this scheme interest rate would vary according to bank interest rate policy. It also called fluctuating interest rate.
*Types of Loan*
[The loan value of retail lending typically range between 20,000/- to 100 lakh.]
A loan account with security is known as secured loan whereas a loan without security is known as unsecured loan.
1. Housing Loan / Home Loan :-
Purpose:- Purchase / Construction / Up gradation / Extension etc. of houses.
Loan Term :- Medium ( 3-5 years ) To Long Period ( 15-20 years)
Interest Rate :- Floating & Fixed rate.
Security :- First Mortgage of the Land / House or Other immovable property.
Registration :- Banker General Lien
Transfer of Property
Sarfaesi Act 2002
Sell Percentage :- According to 2005 survey home loan is selling 49% in India.
Banker General Lien :-
A bankers lien is a special form of general lien, for it includes a right of sale after reasonable notice.
Transfer of Property:-
Transfer of property means an act by which a person conveys the property to one or more persons, or himself and one or more other persons. The act of transfer may be done in the present or for the future.
Sarfaesi Act 2002 :-
[ Securitization And Reconstruction of Financial Assets Enforcement of Security Interest ]
It allows banks and other financial institution to auction residential or commercial properties to recover loans.
2. Vehicle Loan
Purpose :- Purchase of vehicle (2/3/4 wheeler)
Loan Term :- Generally 3 to 7 years. For old cars the loan term may be lower (2 years).
Interest Rate :- Floating . The rate is higher than home loan.
Security :- Hypothecation of the vehicle purchased in favor of the bank.
( the mortgage of movable property is called hypothecation)
Registration :- Road Transport Commissioner’s Office ( RTO).
Sell Percentage :- According to 2005 survey vehicle loan is selling 28% in India.
3.Consumer Durable Loan
Purpose :- Purchase of white goods. ( Refrigerators, Washing Machine, Television,
Music System, furniture, other kitchen equipment’s. )
Loan Term :- 18-48 months, Depending on cost
Interest Rate :- Floating. The rate is higher than home loan & Vehicle loan.
Security :- Hypothecation of the assets purchased.
Sell Percentage :- According to 2005 survey Consumer Durable loan is selling 7% in India.
4.Consumption Loan :-
Purpose :- Travel, Marriage or other function / event requiring large expenses.
Loan Term :- Short Term Loan ( Generally lower than 36 months) or demand loan
Interest Rate :- Floating. The rate is higher than other retail loan.
Security :- No Tangible security.
Sell Percentage :- According to 2005 survey Consumption loan is selling 16% in India.
5. Agricultural Loan
(Crops Loan)
Purpose :- To meet working capital requirements for cultivation of crops.
Loan Term :- Not more than one year. ( Two Crop Season )
Interest Rate :- Generally lower than other retail loans.
Security :- Hypothecation of crops & Mortgage of Land for higher loan amounts.
(Farm Equipment Loan)
Purpose :- To acquire assets like pump sets, Oil Engine etc .
Loan Term :- 5 to 15 years depending on life of the assets.
Interest Rate :- Generally lower than other retail loans.
Security :- Hypothecation of crops & Mortgage of Land for higher loan amounts.
*Loan Repayment System*
There are two types of loan repayment system.
1.PDC ( Post Dated Cheque ) :-
In banking, a post dated cheque is a cheque written by the drawer ( Payer ) for a date in the future.
2.ECS ( Electronic Clearing System ) :-
Electronic clearing system is an electronic method of fund transfer from one bank account to another
*Types of Cheque*
There are two types of cheque.
1.Cross Cheque
A crossed cheque is any cheque that is crossed with Two Transverses Parallel Lines. This double line notation signifies that the cheque may only be deposited directly into a bank account.
2.Bearer Cheque
A bearer cheque can be used to be payable as cash. The cheque is payable over the counter to the bearer by the drawee bank.
[Validity of cheque is 90 days means 3 months]
[Validity of Demand Draft is 90 days means 3 months]
*Negotiable Instrument Act 1881 Section 138*
Liability of prior parties to holder in due course every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied.
*Power Of Attorney*
A depositor would like to transact his business through another person. Banks accept this arrangement. A power of attorney is a document, duly stamped as per Stamp Act, given by a customer to his Banker, authorizing his attorney or agent named therein to operate the account.
*Right of Set Off*
A set off clause is a legal clause that gives a lender the authority to seize a debtors deposits when they default on a loan. A set off clause also refer to a settlement of mutual debt between a creditors & a debtor through
*Types Of Cards*
There are five types of cards.
Charge Card
Credit Card
Debit Card
Smart Card
Membership Card
Charge Card
In such cards transactions are accumulated over a period of time generally a month and the total amount charged, i.e, debited to the account of the card holder. The cardholder is given about 25 to 50 day’s time to credit his account in case there are insufficient funds in his account at the time of debit.
Credit Card:-
A credit card & Debit card is small plastic card around 8.5cm by 5.5cm.Where the transaction are charged to the account with the total value of transaction debited to the card holders account once in a month. Credit card is also called cash credit. Free credit period is 45 to 60 days from purchase (depending on the billing cycle). Interest rate is payable on the over due amount is 20 to 42% per annum plus service tax. The card holder has the option to pay entire amount as soon as the account is debited or he can pay it in monthly installments later.
Debit Card:-
Debit cards are same as the credit card. The only difference in this card is that the account of the cardholder is debited as soon as each transaction is notified to the issuer. If the balance is insufficient to cover the debit, the difference becomes payable immediately or else a service fee is levied. If the amount payable is overdue for a long period, the card may be cancelled.
Smart Card:-
The smart card looks exactly any other plastic card or an ATM card with an Integrated Circuit ( IC Chip ) installed. Smart card can provide personal identification, authentication, data storage.
Membership Card:-
A membership card issued to and held by a member of a club, society and other organization (For example:-Taj card)
*Anti-money laundering*
[black money was converted into white money]
Money laundering is a process whereby the origin of funds generated by illegal means drug trafficking, illegal arms trade, corruption, extortion etc.
There are three stages of money laundering.
1.Placement
It means physical disposal of proceeds of criminal activity. Placement is the process of moving black money into the legitimate economy and away from its source.
2.Layering
It means separation of illicit proceeds from their source by creating complex layers of financial transactions thereby avoiding audit trail and providing anonymity to the source of funds.
Book keeping Records Hide in Layering
3.Integration
This is the final phase in which such money’s are invested in legitimate economic activity as normal funds. One of the most common ways of integrating the money into the economy is through buying property
Steps taken by the Government of India:-
Government of India has passed legislation in 2002 named prevention of money laundering Act.
The objectives of Prevention of money laundering Act is to
Enable banks to know and understand the customers and their financial dealings better
To help the bank to manage risk prudently
Help banks put appropriate controls for detection and reporting of suspicious activities in accordance with acceptable laws and laid down procedures
To comply with applicable laws and regulatory guidelines
Help take the necessary steps to ensure that its staff is adequately trained in the above required procedures
*KYC ( Know Your Customer )*
In 2002, RBI has issued directive to all bank for complying with the procedure of
‘Know Your Customer’ in respect of all of their new and existing domestic and non resident customers. KYC establishes the identity and residential address of the customer by specified documentary evidences. Banks are required to know the actual identity and his/her financial background before accepting as a customer. One of the main objective of KYC procedure is to prevent misuse of the banking system for money laundering and financing of terrorist activities.
*Types of Assets*
Their are two types of Assets
Performing Asset
Non Performing Asset
Performing Asset
1.Standard Asset:-
Standard assets are those that service their interest and principle installments on time. Standard assets are also called performing asset.
2. Non Performing Assets :-
The loan amount is overdue for a period of more than 90 days, is called as non performing assets.
Non performing asset classified into three categories:
1.Sub-Standard Asset:-
If 3 EMI’s of a loan remain unpaid for a period of over 90 days but less than 12 months, then the account will be treated as a sub-standard asset.
2.Doubtful Asset:-
The loan amount is unpaid for a period of 12 month but less than 24 months, then the account will be treated as a doubtful asset.
3.Loss Asset:-
A loss asset is one where loss has been identified by the bank or internal/external auditors or RBI inspection, but the amount has not been written off wholly. Loss asset are considered uncollectible.
*Amortization Schedule*
An Amortization schedule is a complete table of periodic loan payments, showing the amount of principle and the amount of interest that comprise each payment until the loan is paid off at the end of its term.
*Banker Pledge*
Pledge means bailment of goods for purpose of providing security for payment of debt or performance of promise.
गिरवी
*Debt Recovery Process*
Their are four types of recovery process
1.Normal Recovery Process :-
Where the debtors are willing to pay the dues smoothly without resistance, is called as normal recovery process.
2.Difficult Recovery Process :-
Where the debtors are not willing to pay the dues and who intentionally resist or avoid recovery efforts: the recovery agent would need to apply special process of recovery against the defaulter, in consultation with the bank.
3.Assets Possession Recovery Process :-
If the debtors do not eventually pay the dues, the movable assets charged to the bank by way of hypothecation or pledge, can be possessed by the bank or the recovery agent and thereafter auctioned or otherwise sold to recover the dues.
4.Legal Recovery Process :-
The intervention of the court is required to possess mortgaged immovable property by the bank or its recovery agent.
*Lok Adalat*
Lok Adalat can handle only financial cases. The forum of Lok Adalat for recovery of personal loan, credit card loans or housing loans with less than or equal to 10 lakh as suggested by the honorable Supreme Court.
*International Best Practices on Debt Recovery*
1.Practices in USA
The FDCPA (Fair Debt Collection Practices Act) is the regulator authority on debt collection in USA.
2.Practices in UK
In UK, debt collection agencies are licensed and regulated by the Office of Fair Trading (OFT). Office of Fair Trading has set out guidelines on how debt collection agencies can operate.
*Balloon Payments*
A large, lump-sum payment scheduled at the end of the a series of considerably smaller periodic payments. A balloon payment may be included in the payment schedule for a loan, lease or other stream of payments.
*Banking Ombudsman*
Service and other avenues for redressal within 60 days of lodging a complaint with us, if you do not get a satisfactory response from us and you wish to pursue other avenues for redressal of grievances, you may approach Banking Ombudsman appointed by Reserve Bank of India under Banking Ombudsman scheme 2002.
*Bank’s Obligation To Maintain Secrecy Of Account*
When a person opens an account in a bank he is entitled to a reasonable assurance that information regarding the account remains a matter of knowledge only between the banker and account holder. This is so because, it is one of the principle duties of the banker to maintain complete secrecy of the status of his customer’s account. This obligation of the bank to maintain secrecy continues even after the customer’s account is closed. If the banker makes an unwarranted disclosure of the status of account of his customer, he become liable to compensate the customer.
There are certain circumstances in which the banker is entitled or required to make disclosures about a customer’s account. Let us understand the conditions under which a banker is justified in making disclosure.
1.Under Law
(a) Income Tax Act, 1961 section 131 & section 133(6)
(b) Companies Act, 1956 section 235 and section 237
(c) Bankers Book Evidence Act 1891 section 4
(d) Reserve Bank of India Act, 1937 section 26
(e) Foreign Exchange Management Act, 1973 section 11
(f) Gift Tax Act, 1958 section 36
2.Under Express or Implied Consent of The Customer
When an account is opened with the bank, there is an implied contract between the customer and the bank that the latter will not disclose information relating to his account without his consent. If however, a customer permits, this information can be disclosed.
3.Common Courtesy Among Banker
Under the practices/usages in the banking system it is customary among the bankers, that whenever a bank makes inquiries with another bank, such as, about proposed sureties or acceptors, such information is shared.
4.Disclosure in The Bank’s Interest
A banker can disclose information when it is essential to protect his own interest, legally. For instance, if there is any dispute between the customer and a banker, regarding balance standing in the account of the customer or if there is a loan default, then the bank will be justified in revealing the information to the guarantor or to a solicitor for initiating legal proceedings in the court of law.
5.Disclosure in Public/National Interest
Banker may be required to make disclosure in the interest of the nation at large. Public interest may be reckoned only according to the prevailing circumstances.
*Debt Recovery Policy*
Dignity and respect to customers
Courtesy fair treatment and persuasion in interactions with customers.
Appropriate authorization
Due notice to the customers
Use simple business language in all verbal / written communications with customers
Keep privacy and confidentiality of customers dues and other records
No misleading statements or misrepresentation be made to customers
*CODE OF CONDUCT OF DRA*
Courtesy
Respectful
Fairness
Politeness
*Function Of DRA*
There are five types of function
1 Collecting due receivables:
Collecting due receivable is the core function of debt recovery agent.
2 Remitting collected funds:
The funds (cheque / cash) collected from the debtors would need to be sent remitted / deposited by the agent to the creditor periodically as per the agency arrangement.
3 Initiating legal action:
IN case the debtors / guarantors have means assets but are unwilling to repay the loan, the debt recovery agent can recommend legal action. After obtaining the instruction / consent of the bank the recovery agent would initiate and pursue legal proceeding on behalf of the bank.
4 Tracing debtors:
Dues collecting agencies with nation-wide presence and large resource and computerized database also act as tracing agents of defaulters / debtors who have disappeared and are not traceable by the credit institution.
5 Compiling opinion reports:
The means and net worth of the principal debtors / guarantors, who have not paid the dues for a long period, remains unknown to the lender for want of information forthcoming from the defaulters.
*Rights And Duties Of Recovery Agents*
Right to remuneration:
The agency agreement expressly or impliedly provide for remuneration payable by the principal to the agent.
Rights to retainer:
The rights to retainer means that an agent can retain the money belonging to the principal, for meeting the following kind of expenses, and thereafter remit the balance amount to the principal.
-The expenses incurred during the course of agency.
- Any sum due to the agent as remuneration.
Right to compensation :-
The principal is liable to compensate the agent in respect of any injury caused to him either because of the principals neglect or want of skill (section 225 of the contract Act).
Right to Indemnity :-
Section 222 of the contract act provides that the employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. Thus there are two essential conditions to be satisfied by an agent to claim indemnity from the principal:
1] The agent must have acted lawfully when the injury was sustained.
2] The act should have been done in the course of the agency business.
Duty to Exercise Care & Skill :-
A recovery agent has duty to take all care and skill in discharging his duties has if he is managing his own affairs. Section 212 of the contract act says that an agent is bound to act reasonable diligence and also to use his skill. He is also liable to compensate the principle in respect of the direct consequences of his own act.
Duty to Communicate:-
It is the duty of an agent to use all reasonable diligence in communicating with his principle in case of difficulty , and obtaining instruction (section 214 of the contract act). Whenever there is some doubt or difficulty, the agent has to act according to the principles wishes ,rather than to whatever he feels like .
Duty to render accounts :-
An agent is bound to render proper account to his principle on demand (section 213 of the contract act) . he should keep his principles accounts up-to-date ,so that they can be furnished to the principle on his demand .further ,an agent is required to keep his principles money separate from his own.
Duty to remit money :-
Section218 of the contract act provides that an agent is bound to pay all sums received by him on behalf of the principle ,subject to such deductions as the agent is entitled. This is called agent duty to remit money to the principle.
Duty not to delegate :-
An agent can not delegate his authority unless he is so permitted by the specific contract with the principle or established tread practice .
*WHAT DRA DO AND DON’T*
The DRA must identify himself /herself as a representative of the Bank.
Customers are to be treated with dignity. DRAs should always remain professional during telephone conversations and visits.
The DRA is strictly prohibited making telephone calls without meaningful disclosure of the callers identify.
No written or verbal threats, abuse or rudeness is permitted. Collection staff / Agent should use only acceptable business language even if the other party does not follow the same.
DRA, being responsible persons deserves to be treated with dignity. They may refer the customer to management, or end calls when a customer becomes abusive or threatening. Customer should be information prior to termination of such calls.
DRA should, as far as possible, use the language which the customer is comfortable with.
Customers are entitled to privacy and the DRA should respect this right.
DRA should ensure that all written and verbal communication with its borrowers will be in simple language understandable to them.
DRA should be called to the customer between 700 hrs. (7am) and 1900 hrs. (7pm).
DRA should be visited to the customer between 700 hrs. (7 am) to 2100 hrs.(9pm.)
DRA should endeavor to answer customers queries and render assistance to resolve issues.
Not enter the customers residence against his/her wishes or when they are told the customer is not at home.
Respect the customers privacy-do not embarrass the customer in the presence of his/her neighbors
If the customer is not present and only minors/elderly/infirm are present at the time of the visit, the collection staff/ agent should end the visit with a request that the customer call back. He should not enter the house unless invited .he should not wait for the customers in the customer residence unless specifically asked to do so by the customer or family .
*RTGS*
The RTGS ( Real Time Gross Settlement ) system is primarily for large value transactions. The minimum amount to be remitted through RTGS is Rs.2 lakh. There is no upper ceiling for RGST transaction. Indian financial system code (IFSC).
*NEFT*
The NEFT (National Electronic Fund Transfer) service helps in the seamless transfer system of funds from one branch to another without any delays or procedural hassles. Like RTGS, RBI has introduced another type of funds transfer system called NEFT (National Electronic Funds Transfer. This facility can be availed only by account holder of a bank since both the beneficiary as well as applicant account number should be compulsorily mentioned in the NEFT application from.
*IMPS*
Immediate payment service (IMPS) was launched by NPCI on 22nd November,2010. It offers an instant ,24x7 interbank electronic fund transfer service through mobile phones as well as internet banking & ATMs.
