ICICI's bully-boy tactics fail to impress

Google Indian bank ICICI at the moment and you’ll find more than just information about its best-buy savings rate: the Indian Supreme Court accused it last week of using musclemen to harass its customers into repaying their loans.

New Delhi’s Supreme Court said it used these musclemen or ‘goondas’ to pressure its customers into repaying defaulted loans – allegedly driving one to suicide. Read the full story here.

Naturally, the point of the story was not to imply for one minute that the bank would consider using similar tactics here in the UK. I am interested however in what British savers think of this, and whether they would consider lodging their savings with an institution that allegedly is not afraid of using heavy-handed methods to keep its customer base in its home country in line

The details of the case shed light on a situation that seems draconian even when compared to some of the worst debt collecting agencies in the UK. Can you imagine a bank allegedly pushing their way into the bedroom of a customer here in the UK and dealing them a barrage of abuse?

People who default on their loans here don’t know how easy they have it: even a mildly intimidatory letter from a bank can be reported. Customers are not so well protected in India it seems.

On the rare occasions when these banks are caught out, the fines are miniscule, £300 paid to the deceased customer in ICICI case (again, read the link to the story above). There is the reputational damage, but is this really severe when the entire Indian banking system has been indicted?

Then again, this heavy handedness is unknown in the UK, so perhaps the banks will suffer more over here.

The question of whether foreign banks are safe depositories for our savings has been a heated issue over the past few months following on from the Northern Rock affair and fears over the Icelandic banking system.

But perhaps we should be asking in addition to this whether they are also ethical homes for our savings?

There are other reported cases of ICICI’s alleged harassment of customers in Indian publications and on the internet, this is not an isolated issue. It must be said that similar searches on such foreign banks as the Turkish Akbank and First Bank of Nigeria do not yield similar results to the ICICI situation.

In the interest of fairness, I asked ICICI whether the widespread reports of the Supreme Court ruling were true and, if so, how did they wish to respond. Frustratingly, after a day and a half of discussion via its press relations agency, ICICI refused to deny or accept the claims and instead issued us with this statement instead:

‘ICICI Bank is extremely committed to the highest standards of corporate governance. We have committed 1% of our annual profits towards the cause of sustainable economic development and inclusive growth in India. Our diverse efforts across India can be seen easily at www.icicifoundation.org. As part of our operations across 19 countries in the world, ICICI Bank UK plc was launched to offer UK savers a better deal with great rates and no hidden catches.’

This is Money had lengthy discussions with ICICI over this article. ICICI’s public relations team stressed the need for balance, the potential for damage to the bank’s reputation and ICICI’s need to have its say. In light of this, I think it is not unfair to say this statement is a deeply unsatisfactory response for any UK customers who may be concerned about the bank’s practices in its home country.

Either way, reports such as those coming from India merit further investigation, given the fact that ICICI accounts for a third of all consumer loans in India and the personal loan market grew by 30% in India in 2006. Not only that, but the bank is gaining increasing prominence here: it told us it had 80,000 UK customers last November, growing at a rate of 5,000 every month.

This ICICI UK customer base of approximately 110,000 and the rest of Britain’s borrowers are in no danger of being roughed up over a loan. The UK has adequate checks in place to prevent this kind of thing. The question is, how do we feel about those who are not afforded the same luxury?

Comments

[JH]

I will be immediately looking around for another savings account. I will not tolerate such behaviour in another country that I'm investing in.

[Balwant Munglani]

It is appalling conduct on the part of ICICI. I am sending a copy of this article to all I know in UK.

[David Austin]

It doesn't make nice reading...Just how aggressive is it ?
I have more problem with our governmental "goondas" who are trying to rule our lives..Let's try to get our own house in order before worrying about foeign problems.