Rights to Keep the Recovery Bullies of FinTechs at Bay

“If you are a borrower, you must repay. But if a money lender tries to humiliate you for defaulting, then you must understand your right to stand against them.”

The COVID-19 situation has brought the economy at a standstill and thus. many people have lost or had their source of income reduced.  This has led to people defaulting on the time limits set for paying off their loans. The RBI has offered loan moratorium for a period of six months but many small lenders (NBFC) are not offering the same to their borrowers on the small loans granted by them.

A Recent Case of Vikas Sharma

Vikas Sharma is a self-employed professional from West Bengal who took a small loan of Rs 11500 from a small lender named WiFiCash. It is an app-based lending platform granting smaller loans. Vikas took the loan before the lockdown which was enforced in March 2020 and so, due to loss in business he was unable to repay the loan on time. During the days of Mid-April Vikas started receiving massages on his registered mobile no. with the NBFC regarding repayment of loan. Vikas thinking that his lender will also give loan moratorium thought that he will repay his loans later. But soon he allegedly started receiving threats on his mobile number in form of massages. The threats included that he will be declared a fraudster and a police complaint or court notice will reach him soon. Next followed was the frequent calls from the recovery agents of the lender stating consequences of non-payment of loans. The lender not only rejected the loan moratorium request of Vikas but also charged one percent penalty for each day after the due date. Soon the loan amount started growing and Vikas had to take debt from relatives to pay off the loan with interest. 

What Debtors like Vikas Can Do in Such Situations?

It is the choice of an NBFC to grant Loan moratorium. Ilica Chauhan who is vice president of an Online lending platform said; 

“We analyse the profile and eligibility of borrowers applying for the loan moratorium. Then take a decision of deferring repayment only for those borrowers who we identify as genuine applicants unable to repay the loan instalment.” 

However, having the right to accept or reject loan moratorium application of debtors doesn’t allow the lenders to behave aggressively or humiliate any debtor in case they default on their repayments. The Digital lenders Association of India (DLAI) has recently issued a code of conduct for the member Fintech companies to maintain the ethical practices in lending. The code of conduct states they the FinTechs cannot charge exceptionally high late fees on any defaulter and the process of charging late fees should be transparent. Also, the customers should be informed about everything in detail at the time of lending. The onus then fall on the customer for repayment of late fees. 

How to Handle Aggressive Recovery Agents?

• A borrower has the right to know the identity of the loan collection agent.
• The borrowers also have the right to maintain their own privacy and not discuss their other debts. 
• A lender or their collection agents must treat the borrower with dignity and any humiliating behaviour is not allowed. 
• If a lender is found to be a nuisance for the borrower then they can file a complaint with the regulatory financial institution of the lender or take legal action. 
• A borrower can also complain to the police by registering a case of harassment against the lenders. 
• The collection agents can only call the lender from 7AM to 7PM and borrower is not oblige to pick up any call outside of the mentioned slot. 

What Borrowers Should do if they Default?

Borrowers can talk to their lenders and arrange for loan moratorium for the period of non-payment of loans. Harshil Morjaria, a certified financial planner at ValueCurve Financial Solutions said that, “In many cases the banks/NBFCs offer the borrower a flexible and easy option to repay the loan while restructuring. However, your credit score gets impacted adversely because you did not repay in full,”. A borrower can even negotiate with the FinTech lender to allow them to settle the loan once and for all with paying any additional penalty charges. Although, if a borrower feels threatened by the lender, then taking the help of legal professionals is recommended.  A legal professional can help you in negotiating the final repayment amount with the FinTech and also help keep the recovery bullies at bay using the legal discourse to tackle them. If found necessary, file a complaint against the lenders with the police through the help of legal professionals.