Foreign banks cannot engage recovery agents: Kerala HC

The High court of Kerala has instructed foreign banks not to engage recovery agents in India to realize loan amounts from the defaulter. The state police chief informed that strict instructions were given to all district police chiefs to ensure that no unauthorised loan collection agents were functioning in the state.

Thiruvananthapuram:The High Court of Kerala on Thursday ordered that foreign banks or financial institutions cannot engage recovery agents in India to realize loan amounts defaulted by the expatriates.

The bench of Justices K Vinod Chandran and VG Arun made the judgement based on the petition filed by Kollam resident Susheela who had returned after working as a nurse in Saudi Arabia. She sought police protection against attempts by the recovery agents of Al- Rajhi Banks, Saudi Arabia; to intimidate her and compel her to pay the defaulted amount.

In addition, the court also said that the foreign bank or financial institution can initiate legal action for recovery of the pending loans from the defaulters, which can even be in pursuance of judgement which the bank has obtained the foreign country.

According to the petitioner, two persons from a recovery agency named KGM Associates appointed by the bank had threatened her that if she fails to repay her loans, she would be arrested and taken back to Saudi Arabia.

KGM Associates was employed for 'debt-collection services' in Kerala by Mumbai based Bilkish Associates Pvt. Ltd., which has been appointed by Al- Rajhi bank to act on their behalf in India.

The state police chief informed that the court strict instructions were given to all districts police chiefs to ensure that no unauthorised loan collection agents were functioning in the state.