What gives loan companies the right to make customers sign blank RTO forms?

[dicorex4x4]

I'm neither supporting nor opposing the practice, I'm only narrating my experience and saying its safe to sign those agreements. Has anybody been at the receiving end of these "trusted private banks" even though he / she has not defaulted?

On a side note, found this Stolen Vehicles-Nation Wide RTO's

[kkr2k2]

"All banks to it. This is according to RBI guidelines."

Can this matter be taken to the notice of the RBI???

This could be a common thing to happen and banks would not take advantage of looting the customer but this method does give a window of oppurtunity to loot the customer by the banks intentionally or unintentionally due to technical mal-functioning of systems, such things do happen and banks take their own sweet time to resolve these kind of issues, nationalised banks included. In the end the customer is the loser.

I might be paranoid but i dont want to take chaces.
raj.

[mmmjgm]

Hi,

Interesting discussion, Let's say a person taking a loan pays off all the instalments. At the end of the tenure are these papers handed back ?

Or only the NOC for removal of hypothecation given ?

Do advice.

As per observation (a couple no more) many people do not take these signed documents blank documents back which would have been used in the event of default ! Where do these documents go ?

Cheers
M M

[dicorex4x4]

The agreement etc. is valid only for the vehicle under hypothecation with the bank. May I request all of you to please spend some time, read the entire agreement and all other documents where you are required to sign? And then decide validity (of the documents, not the practice)?

The truth is, most of us are so excited about the new vehicle that we don't spend time to read what we are being asked to sign. We spend hours / days for test drives and cannot afford 30 minutes to (carefully) read some documents?

[dicorex4x4]

Originally Posted by arajand

If you ask me, this is a wrong perception. You may think you wouldn't default. You may never want to default. But you can never know whether you are going to default.

If a bank can take safeguards against your defaulting, you can and should take safeguards too. Like not to deal with unscrupulous banks who are out for your pound of flesh for a loan default (signatures on blank papers, imagine).

arajand, I agree with your statement on defaulting. However, I feel that is a separate topic of discussion (personal finance). I know you're referring to the extension of that to signing blank documents - all I say is why leave them blank. A scrupulous bank would give you a quotation for a loan with start and end dates - why not use this information and fill in the details?

Which bank says - do not fill in the details? You have to sign on blank documents.
It is the DSA who says - sir / madam, just sign and we'll fill in the rest.

Lastly, why not take photocopies of everything we've signed?

[TakeOnMe]

IMO, the 'owner' term as you are reading has maybe mislead you. If an 'item' is hypothecated to a financer, how can this 'item' be exclusively yours? Can it be transferred. No. Can it be liquidated. No. Can it be returned. No.

The title has an encumberance, of the lender. And the lender is securitising his investment through these agreements. That's all.

[dobriyal]

Originally Posted by dicorex4x4

arajand,
A scrupulous bank would give you a quotation for a loan with start and end dates - why not use this information and fill in the details?

Which bank says - do not fill in the details? You have to sign on blank documents.
It is the DSA who says - sir / madam, just sign and we'll fill in the rest.

Lastly, why not take photocopies of everything we've signed?

One rule I learnt in business school and have been sticking to it after some bad experiences (I didn't learn enough immediately ), "Your signature is very valuable, never sign anything assuming you can prove you intension for if you run into problems." Even after taking photocopies you can never prove your intension of why you signed an incomplete RTO form that says you have sold off your vehicle. The name of the buyer would definitely be blank on the form and there is no start and end date to such a form.

[dicorex4x4]

Boss, all I am saying is:

1. Read every page of whatever document is shown to you.
2. Fill in as much information as known to you at that point in time.
3. Take photocopies of every document you signed. Put a date underneath your signature (this is a good habit anyway)

If in doubt, consult a lawyer. Maybe some of our lawyers here have an opinion on this. Assuming at least one of them has availed a loan from a private bank. Or somebody who has registered a vehicle in company name with finance from a private bank?

[dobriyal]

Originally Posted by dicorex4x4

Maybe some of our lawyers here have an opinion on this. Assuming at least one of them has availed a loan from a private bank. Or somebody who has registered a vehicle in company name with finance from a private bank?

Yes, opinion of lawyers would be great. The whole point of this thread is to know my rights as a consumer. There are laws to take defaulters to task and that's what the banks should be using. These extra-legal tactics are just to save legal expenses by getting more aspects of the case in their favour than they legally should have a right on.

Not only the opinion of lawyers but I would like the courts to respond to this issue. As I have already purchased my car and won't be buying one for another few years, this thread is for the benefit all of us, consumers. Maybe no one has faced a problem yet due to signing such forms, but that doesn't guarantee what could happen tomorrow. Such a system gives the opportunity of putting the consumer at risk for the benefit of these financial institutions. If they are so insecure about giving auto loans they should leave this business. If they are in it, then they better follow the law. To loop it back, yes, I would like to know what the law says on this issue.

[arajand]

@dicorex
I agree with you. Especially on retaining copies of every document you sign/hand over during loan application or car delivery.

But I am trying to talk about a more fundamental issue.

Every loan is the same. It is the terms of what will happen in case a default occurs, that differentiates the different lenders. Banks like ICICI, HDFC are aggresive in their loan recovery, and try to get customers to sign lopsided agreements. Banks like SBI do not follow this course of action.

The customer should retain as many rights a normal citizen does, in case of a default. He should refuse to sign documents which violate this principle. After all, the bank and the car owner enter into an agreement as equals in the loan disbursement process. Why does one of the parties deserve more 'security' than the other?

Why do banks need forms 26-form 30? Form 30 authorizes the bank to reregister the vehicle after possession from the loan applicant. Why should the car owner sign the other forms? Form 30 should be enough, IMO.

Cheers,
-Anand

[mmmjgm]

Here according to my understanding of the banking and its associated legal practices and procedures is that the advantage to the hypothecating bank (autoloans) is

1) Recovery costs - legal costs, sending notices, filing cases etc.
2) Ease of practical asset recovery

ICICI, HDFC, Citi, Stanchart etc (non PSU banks) follow this practice. Apparently the borrower is deemed to be a defaulter even before disbursal.

My question remains. Is this practise legit ? Secondly if it is legit why are the Public sector banks like SBI, BoB, Canara Bank, IOB, Corporation Bank etc not doing it.

Even if you pay off a loan you should get back those signed papers.

Heck I know people who borrow 40 crores and above from banks, even they do not take any such papers (deemed to have transferred building and machinery of any organisation). Why is it being done only with the personal borrowers for auto financing ?

Secondly if it is being done why are not the signed blank papers given back at the end of the tenure ? (this I ask because no one has yet answered my earlier question whether these blank forms are given back or no I assume that the blank signed forms are not given back).

The lending bank has a right of lien. Never a right over the borrower.

Regards

M M

[rkg]

old time money lenders changed face and became new gen Private Banks

the other day i was at ICICI bank home loan section. the guy at the counter got a call from a angry customer who has not got back the sale deed and other papers of his home even after loan is repaid. he was threatening the ICICI " if he does not get them by that day evening he will bring people and create a scene infront of the bank" . the guy who received the call called up his bosses and narrated this and pleaded that they send the original sale deed immediately.

Many new gen private banks never return the all the papers back. most of the customers are all also responsible for this. they don't pay attention to what they are signing and keep a record of it. banks and its agents take advantage of this.

HDFC was fined by courts many times for wrong doings. one particular case was
they debited the a/c of customer of Rs 20000/- as VISA card use. when customer demanded to see when and where he has used the card, bank never responded. finally issue went to consumer court. there also HDFC could not show any proof of transaction. then only they reverted the 20K. if the customer had not noticed it HDFC would have gained by 20K.

CITI and ICICI are notorious of doing such things.

[headers]

We can / should fight and refuse to sign.

The agents who work for the banks are called DSA - Direct Sale Agent - He gets a commission on the number of sales, he does. So while he tries to gas you into believing that RBI authorised him to do everything, if one is firm in the transaction and talks about the alternative finance options that one has got, then these guys come down to lick your feet!

Trust me, it works!

BTW, giving blank PDCs are anyways ILLEGAL! and not valid in the courts!

[mmmjgm]

Originally Posted by headers

Trust me, it works!

BTW, giving blank PDCs are anyways ILLEGAL! and not valid in the courts!

Very True with the DSA bit, the auto dealers also get a "subvention" amount for pushing various banks auto loans

A PDC is not illegal, however make sure it is not blank in all contexts, write the amount down clearly and the name of the payee. It can be a PDC no issues.

However the critical factor here is that in the event the PDC bounces due to "insufficient funds" it is a violation of the Negotiable Instruments Act - liable for Criminal prosecution. However on the other hand it is okay to accidentally issue instructions to your bank to bounce the cheque stating you have lost the cheque book <- do not do this. as it goes onto your CIBIL report and stays there for 3 years.

CIBIL is another thingy like a credit report and report card of loan repayment history for past 3 years.

How I know - I work in a BPO and with Banks.

Cheers.

[dobriyal]

Did someone manage to get a legal opinion on this issue?