Bank fined for violence by collectors

Authorities fined India's biggest private bank more than $130,000 after its loan collectors beat a man with iron rods and dragged him from a car before seizing the vehicle, state officials said Tuesday.

The Delhi State Consumer Commission ordered ICICI Bank to pay $137,500 in penalty on Monday, one of the biggest fines involving a consumer case. The ruling comes as the country's banking regulator seeks to reform the loan collection industry, where violence and intimidation have been on the rise.

The commission held ICICI Bank responsible for "the sufferings caused by (its) agents in a brutal and boorish manner because of which a youth was hospitalized for more than two weeks and received 17 stitches on his skull and back."

Reserve Bank of India Governor Y.V. Reddy warned last week that lenders would be held responsible for such offenses that usually are committed by loan recovery agents hired by the banks.

Reddy said banks must also be responsible while lending to prevent such defaults.

ICICI Bank hired collection agents to repossess a car belonging to Tapan Bose after three of his car loan repayment checks bounced. But Bose wasn't in the car when the agents found the vehicle, so they beat Vinod Kumar, a 21-year-old family friend who was waiting for him.

"No civilized society governed by rule of law can brook such kind of conduct," J. D. Kapoor, president of the consumer commission, said in his ruling.

"Time and again we have warned and restrained them from employing musclemen," he said.

ICICI Bank could not be immediately reached for comment.

The bank can appeal against the decision to a higher court.

The attack, which took place on Jan. 8, highlights the downside of India's economic transformation over the past 15 years since the country switched from a socialist-style state to a more open economy.

Policies to allow private banks and encourage competition have led to rapid growth and fueled an economic boom, but loan defaults and intimidation by loan collection agents have also increased.