Forgive thy debtor !
By: Navin (September 24th, 2008)
Lehmann Brothers is not the only people to be facing the brunt of the economic slowdown but rather it’s also the layman on the streets who is equally suffering. One of the major reasons of this worldwide financial crisis is the piling delinquencies and defaults on loans which have left all major financial institutions reeling under the pressure of mounting losses and the increasing pressure from the investors and management to salvage all that is slipping out of their hands.
The effect of the monster sub prime crisis has lifted its ugly face in India as well. Most of the financial institutions are going through a tough face, cost cutting at its peak, hiring freezed and firing and laying off employees seem to be the way forward. The only people who seem to be keeping their jobs are the Collection and recovery agents, the nightmare for any defaulting customer.
With every lender trying to keep himself afloat, it’s pressurizing its collection agents and staff to get those disappearing EMI’s. There is tremendous pressure on each employee to be accountable for the money given in the market. And this seems to be showing off on the collection practices adopted by most organizations who want to keep it clean but somewhere down the line get forced to apply arm twisting measures to make the borrower pay.
There have been many instances where citizens have been so tormented that they have had to take ultimate measures like committing suicide or running away from his home to keep the collection agents at bay. Though most of the cases are ability issues, where the borrowers cash flow has been severely hampered due to the rising prices of goods and commodities and other factors rising out of the economic slowdown, there are also a set of customers who have made it a habit to defraud financial institutions and use their muscle power and superior contacts to avoid any repayments.
One of the major problems facing the financial institutions from exercising their right to get the money back has been the beleaguered legal system which is already having a backlog of lakhs of cases and even if they manage to get the person to court there are no stringent precedents set for the customer to fear any implications of his/her not paying the loan. This long drawn battle does not help anybody, especially the customer who will be left paying extra amounts for fighting this expensive battle while the end result is not encouraging enough for the financiers to depend on the legal system to get the money back.
What results is an all out battle between the bank and the borrower which most often leads to ugly instances resulting in the defamation of both the parties. But the Reserve Bank of India seems to have trained its guns on the banks and financial institutions who adopt such measures to get the money. They have come out with new set of rules and regulations for doing collections with measures to protect the human rights of the borrower, so that there are no deviations to laid down guidelines.
Hopefully this will make the banks and financial institutions become more responsible and more than that apply a more human approach to recovering money. But I guess the Reserve Bank should also be looking at how to safeguard the interests of all lending agencies also like the Federal Reserve in the U.S. has come out with a bailout package for all the investment bankers. Only if the apex body decides to protect the interest of the banks, will we in turn see a marked change in the way recoveries are conducted in our country, hopefully!
This makes me remember of a parable given by Jesus in the Bible, which said, while the King was settling accounts with his servants, a man was brought to him who owed ten thousand talents (equivalent to millions of dollars). Since he was unable to pay, the master ordered that he and his family be sold to pay off the debts. But the servant fell on his knees and asked the King ‘to be patient with him’. The King took pity on him and cancelled his debts and let him go. But this servant on his way out met another man who owed him a hundred denarii (a few dollars), he choked him and forced him to pay back the money. He had him thrown in to the jail. Hearing this the King told him ‘You wicked servant, I cancelled all the debts of yours, shouldn’t you had mercy on your fellow servant just as I had on you?’ and had him thrown in to the jail to be tortured till he paid back all he owed.
We have been forgiven all our sins so we should also learn to forgive the debts of others. If much has been forgiven to us then we need to be more compassionate to others. God forgave all our sins and every wrong that we did by paying a huge price of giving his own life on the cross, so he expects us also to be forgiving towards the wrongs that others do to us.
Tags: federal reserve, investment bankers, Lehmann Brothers, RBI, slowdown