Loan recovery agent at the door? Stay cool, get set for a hard talk

John C, 30, works in an IT firm in Bangalore. He was having a regular Friday last week at his new work place, waiting for the weekend to begin.
That was until three hefty recovery agents walked into his office and requested him to step out for a discussion on the loan he took to buy a Santro from one of India's biggest private sector banks.
As soon as he stepped out of the office building he was forcefully pushed into an empty auto rickshaw and taken to a police station in Indira Nagar to 'sort things out'.
In the auto, while riding to an unknown destination, John had the presence of mind to call the Debt Doctor hotline (+91 9535537978).
This is an emergency debt management service helpline where defaulters can reach out for professional and legal help.
Seen John in conversation with Debt Doctor, the thugs stopped the rickshaw, asked John to get out and drove away.
"I had been unemployed for some time after I took the loan and so paying back during that period was difficult. But I had told the bank I am ready for a settlement later. They, however, refused and asked me to pay back the loan amount in full," John recounted 24 hours later on last Saturday.
Debt Doctor called John over to its office in Residency Cross Road, Bangalore, and also invited the recovery agents. Together, they started to thrash out a compromise over the `3.75 lakh loan.
A settlement was reached at `1.8 lakh, which the bank agreed to. John left for his hometown in Kerala on Sunday, to garner the repayment.
Debt Doctor, which was launched nationwide in September 2009, receives 25 distress calls a day - up from 15 six months back. Of this, at least five are emergency situations.
On month-ends, the emergency calls rise to a dozen a day, said Ashwin Cannonkadu, founder and chief executive officer, Debt Doctor.
"Today debt recovery teams do not engage into physical abuse as was reported in the past. But they do intimidate and apply psychological pressure. With the middle and upper middle class, they use the social stigma card very well," Cannokodu said. A public humiliation is bitter medicine for the middle class so they try to pay up than have a scene around themselves.
Debt Doctor reminds defaulters of their legal rights and guidelines laid out by the Reserve Bank of India. It also helps by talking to the recovery agents itself and avoid any illegal methods being involved.
The services are provided free of charge to customers who have enrolled.
"However we do not charge for SOS calls that we get even if the caller is not enrolled with us," Cannonkadu said.

Private banks have often been targeted for stringent recovery methods, however now even public sector banks do not hesitate in using unconventional methods to reduce their non-performing assets.
"Apart from Standard Chartered Bank, Citibank, HSBC and a majority of public sector banks, others banks engage in such activities. The practice is more rampant among the NBFCs," Cannonkadu said.
Corporation Bank puts up pictures of loan defaulters at its branches, to use the stigma involved and recover the loan amount.
"Banks have been instructed to use such methods only in extreme cases, where the person is identified as a willful defaulter," an official from the Indian Banks Association said.