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Posted On: 16 January 2009 04:17 pm
Updated On: 12 November 2020 02:09 pm

Banks cancelling ATM cards of loan defaulters

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As the number of loan defaults has been increasing undeterred, some banks here have begun cancelling the Automated Teller Machine (ATM) cards of the defaulters, in a bid to force them to begin re-servicing their debts. Cancelling an ATM card is an effective way to ensure a defaulter comes to the bank for enquiry, a source in the banking industry said. Some banks are cancelling ATM cards of even those customers whose salaries are for some reason not transferred even once for equated monthly installment (EMI) deduction. “It’s true that due to increasing cases of default, the banks are taking a serious view of borrowers not paying their EMIs. These indeed are difficult times for the banks,” the source added. Legal circles confirm that banks are now quick to refer cases of default to the courts rather than taking them up with customers directly and resolving the issue. “It’s true that banks earlier preferred to take up the issue of default directly with customers and took recourse to legal action only when all other options to resolve the matter were exhausted,” the source pointed out. But with the global crisis threatening to hit the profitability of the banks, things have changed. Not servicing a debt for as brief a duration as three months can land a borrower in trouble. A credit card defaulter told this newspaper yesterday he had received a notice from a lower court to appear before it for not being able to settle his credit card dues for some time. “I lost my job and was looking for another one, which also involved changing sponsorship, so the credit card loan could not be repaid,” the defaulter said. Lawyers confirm that not less than 15 cases of loan default are being referred to the courts on average on almost each working day for settlement.