Microfinance Bank recovery team kidnaps borrower, police register FIR

KARACHI: Interest rates have increased and so have people’s anxieties about how to pay back their loans. And as some residents of Karachi have learned, if you miss a payment you may be in for a beating, a private TV channel reported.

Rising interest rates, coupled with high inflation, have sent the monthly budgets of many a household for a spin. If you are unable to pay monthly credit card dues or are struggling to service home, business, car or personal loan EMIs you could have already faced a recovery agent—or may do so in the future.

A 24-year-old tailor, Ayaz Bhatti, was kidnapped by a microfinance bank’s recovery officers in Karachi on Thursday for failing to pay back a loan he took from the bank.

Bhatti, who works at Nadia Tailors, was thrashed by recovery officers at his shop before being kidnapped from Gulshan-e-Iqbal on a motorcycle.

After six hours, the police raided the bank on the complaint of his family members and released Bhatti. They also arrested the three bank officials involved.

Bhatti has taken a loan of Rs 50,000 from the bank and paid it back in installments for eight months. He didn’t make any payments for the past two months so he was picked up and thrashed. An FIR has been filed against the bank’s recovery team.

“We are still investigating the case and if somebody is involved from the bank, we will take strict action against them. We have a zero tolerance policy against such behaviour,” said the bank’s corporate communication manager.

After an investigation, the police found multiple complaints filed at several police stations in the city against the bank for harassing customers who were not able to pay back their loans on time.

In 2008, after several cases of harassment by banks’ recovery teams emerged, the State Bank Pakistan issued a circular to banks about recovery procedure.

On November 4, 2008, the State Bank issued guidelines on training recovery agents and the methods they can use for collection. These standards have been set for various types of consumer financing facilities, including credit cards, housing loans, auto and personal loans.

“Before proceeding for debt recovery from their borrowers, the bank and DFI will ensure to provide him or her all information relating to payment fallen due,” stated the circular. According to it,

A minimum 14-day notice will be served to the borrower through letter or SMS

No visits are allowed to their houses or places of business

Advance notice will be served to the customer when the bank or DFI staff pick up the payment and it will be recorded

Only necessary information can be obtained from family, friends or third parties of the borrower if they are not in contact for 30 days after the first missed payment

According to the code of conduct, no recovery officer is allowed to abduct any person unlawfully in order to make a recovery.

 

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