ICICI Bank Fined for Tough-Guy Collectors

The rough-and-tumble tactics of collectors for India’s ICICI Bank led the country’s consumer agency to fine the bank 5 million rupees or about $128,000, according to a story in Forbes.com.

Tappan Bose alleged that ICICI’s collection agents impounded his vehicle and beat a friend’s son with iron rods after they mistook him for Bose. The Delhi Consumer Commission also ordered ICICI to pay Bose $12,738 in compensation.

The Bose case follows a case in September when an ICICI customer killed himself after alleged harassment by the bank’s agents. The Mumbai-based bank paid the man’s family about $380,000 in compensation, Forbes reports.

A spokesperson for ICICI said the bank never condones the use of force and that it has regularly fired collection agencies when complaints arise.

Forbes reports that recovery agents in India are known for resorting to intimidation and physical threats to collect debts. The agents are typically hired by banks.

“Banks flout the guidelines because we don’t have a mature market for debt collection. Often, the agent the banks hire are small-time thugs,” Kaviraj Singh, a partner at the New Delhi law firm Trustman & Co., told Forbes. Singh said that Indian collection rules give consumers the authority to cut off calls from collectors and or restrict calls to certain times.

Forbes reports that banks in India are seeking greater government regulation of collection agencies.

The ICICI spokesperson said that the bank controls about 30 percent of the loan market and makes about 8 million calls for recovery each month. It sees default rates of 10 percent for loans of $1,274, or 50,000 rupees. The bank’s default rates are about 2 percent for credit cards and 1.5 percent for auto loans, according to Forbes.