Till debt, defaultment and death do us apart

E.R. RAMACHANDRAN writes: The tragic suicide of a Mandya farmer, unable to repay an ICICI bank loan and allegedly following harassment by the lenders, resulting in a dharna in front of the bank for three full days in Mysore, raises a simple question: is all this avoidable with a bit more care?

# Shouldn’t banks disburse loans with greater scrutiny of the repaying capacity of the borrowers? Since the loans are given away at ‘Loan Melas’, there is normally a cavalier atmosphere under the shamiana and a serious assessment of the borrower’s credit record is found wanting.

# Shouldn’t the Reserve Bank of India, the government and/or financial institutions get into the picture before the loan is approved rather than stepping into after defaultment or death, instead of leaving the discretion of extending a loan and then recovering it entirely to the lending bank?

# Should the lending banks and institutions evolve guidelines for issual of loans? Advertisements shouting “Loans in 10 minutes flat”, “No guarantor required” are used to entice borrowers. Is it any wonder that the banks fall flat on their face? Shouldn’t there be a clampdown on specious claims?

# Shouldn’t the lending banks and institutions evolve a code of conduct for recovery of loans instead of vying with each other in the kind of tactics they employ to recover loans, like verbal harassment of the borrower and his family at odd hours, or physical abuse as was the case in Hyderabad recently?

While the onus is certainly on the borrower to pay up, something seriously seems to have gone wrong on all sides with the result we are seeing all too often the same cycle of enticement, failure to pay equated monthly instalments, phone and physical threats, goons being let loose to recover dues, and shamed borrowers commiting suicides.

Shouldn’t there be some kind of a regulator to rein in all sides?