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Overview of Nbfcs & Issues Relating To Repossession
Overview of Nbfcs & Issues Relating To Repossession
Presented by :
NBFCs : OVERVIEW
13000+ players registered under RBI : A & B categories
Spread all across the country Approx. 570 NBFCs authorized to accept public deposits (Catg. A) Assets worth Rs. 15000 Crore financed annually & growing steadily
Asset financing
Commercial vehicles Passenger cars Multi-utility & multi-purpose vehicles Two-wheelers & Three-wheelers Construction equipments Consumer durables
Role of NBFCs
As recognized by RBI & Expert Committees / Taskforce
Development of sectors like Transport & Infrastructure Substantial employment generation Help & increase wealth creation Broad base economic development Irreplaceable supplement to bank credit in rural segments major thrust on semi-urban, rural areas & first time buyers / users To finance economically weaker sections Huge contribution to the State exchequer
Customer Service
The key factor for our survival & growth
NBFCs provide prompt, tailor made service with least hassles. This more than compensates for the higher lending rates of NBFCs as compared to Banks & FIs All customers get direct and easy access to and individual attention of the top management NBFCs cater to a class of borrowers who :- Do not necessarily have a high income - But have adequate networth - Are honest and sincere (gauged by the personal touch maintained with them).
FIDC - Introduction
Self Regulatory Organization for RBI Registered NBFCs Deposit Taking NBFCs to be enrolled in the beginning Registered as a Section 25 Company Head Office in Mumbai with Regional Chapters started at Delhi, Kolkata, Chennai and Jalandhar Code of Conduct & Fair Business Practices has been formulated and enforced Full recognition from MOF & RBI Invited for Pre-Budget & Credit Policy discussions Equal representation to small & big NBFCs in the Managing Committee
FIDC - Purpose
FIDC has been formed with a very clear focus
To protect the interest of its members To promote Asset Finance Business To represent to Govt., RBI & various statutory & Trade Bodies To promote brotherhood amongst members To ensure fair and ethical practices among its members To bring NBFCs on the mainstream of the financial sector of the country
Repossession Rights
Agreement clearly mentions the Financiers right to repossess in case of default Rights upheld and endorsed by Supreme Court Rulings Orix Auto Fin. Ind. Ltd. V/s. Jagmander Singh, 2006 Charanjit S. Chadha V/s. Sudhir Mehra, 2001 K.A.Mathai & Others V/s. Kora Bibbi Kutty, 1996 Manipal Finance V/s T Bangarappa, 1993 Trilok Singh and Others V/s Satyadeo Tripathi, 1979
Issues
False criminal complaints : harassment & threats FIRs lodged due to ignorance and misguidance Supreme court : Issue is CIVIL (not criminal)
FIRs lodged at police stations other than the police station under whose jurisdiction the place of repossession lies and where the intimation by the recovery agents has been given Typical allegations Thefts & act of dacoity Loss of cash & valuables Physical abuse
Issues (Contd..)
Lack of awareness on legal rights leading to aggravation of problem
Rights under finance agreement & Supreme Court ruling Civil & criminal disputes : need for clear distinction Ownership under Motor Vehicles Act & Sale of Goods Act Only 1 to 2% of the cases lead to repossession blown up by the media
Suggestions
Issuance of Circulars
Repossession rights of financiers Differentiation of civil & criminal offences
Verify before lodging FIRs for theft / robbery against the Financiers
Stringent Procedure for dealing with false complaints Interconnectivity of various police stations within the State
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