The Bhutanese Leading the way.
The National Assembly on Monday, 1st December 2014 endorsed and passed the Human Rights Committee (HRC) report that recommended that Financial Institutions (FIs) should not publish the pictures of loan defaulters in the media. It says that the final decision to publish such pictures or not should be left to the court.
However, Financial Institutions even from Tuesday onwards and through the week have been advertising in both broadcast and print media threatening to release the pictures of loan defaulters within early December itself.
The FIs involved in this are the Bhutan National Bank (BNB), Bhutan Insurance Limited (BIL), Tashi Bank (T-Bank) and Bhutan Development Bank Limited (BDBL). The BNB has given a 10th December deadline, while the BIL, T-Bank and BDBL have all given a 15th December 2014 deadline.
According to Members of Parliament including member of the HRC committee, the Parliament by accepting the HRC report’s recommendation and voting it through has passed a legally binding resolution. The Bhutanese spoke to these MPs to throw more light on the resolution.
Chairman of the HRC committee and Jomotshangkha-Martshala MP, Pelzang Wangchuk said, “As the NA has passed a resolution the customers based on this resolution can ask the FIs not to publish their pictures and if the FIs do not listen then they can pursue even legal means.”
NA Speaker Jigme Zangpo said that the resolution has been finalized and will be sent out to the Ministry of Finance and other agencies. The Speaker made it clear that it was a legally binding resolution.
Deputy Chairman of the Legislative Committee and Tashicholing MP Ritu Raj said, “The resolution passed by the NA on the issue has to be adhered to by all the Financial Institutions as it carries the force of law. If they do publish pictures henceforth then they can be held liable for legal action in court.”
He said that banks publishing pictures of loan defaulters are not only a violation of Human Rights but also Fundamental Rights given to citizens under Article seven of the Constitution.
The Constitution under Article seven section 19 says that a ‘a person shall not be subjected to arbitrary or unlawful interference with his or her privacy, family, home or correspondence nor to unlawful attacks on the person’s honour and reputation.’
Section 17 also says that ‘a person shall not be subjected to torture or to cruel, inhuman or degrading treatment or punishment’.
Ritu Raj said that the international best practice and norm was not to publish pictures. A former Lawyer himself, Ritu Raj said that there more than enough legal avenues to get back the money or mortgaged assets.
He said that the Parliament is the supreme body in the land and laws and resolutions passed by it triumphs over any rules and practices of any organization including Financial Institutions. He said that even if banks went ahead and executed legal agreements in the future authorizing such pictures to be shown, it would still be unlawful.
HRC committee member and Bji-Katsho-Eusu MP Kinley Om said, “We took up the issue based on complaints from the ordinary public who felt that such practices was not good and it lead to people and their family members being looked down upon by society.”
The RMA Act and also the 2002 Prudential guidelines for banks has no provisions in them allowing banks to publish pictures of people defaulting on loans.
A legal expert said that first of all the bank was violating the trust of the customer by using a picture taken for normal banking practices and using it to defame an individual in the national media. The expert also pointed out that the damages caused by such a picture goes beyond the loan itself and causes a lot of loss of reputation, position in society, business credibility, personal credibility and more.
In the absence of any financial law allowing such a practice the legal expert said that even without the NA resolution banks were already indulging in extra legal means.
MPs pointed out that the concern was that banks was using such practices more as an intimidation and bullying tactic and to shame people.
In neighbouring India this similar practice which took off among a few banks from 2013 has come under legal censure in recent judgments from the Kolkata and Kerala High Courts calling such practices illegal and a violation of an individual’s rights.
The HRC report passed by the NA says that breach of loan agreement is generally a civil offence and agreements drawn up by banks already give them enough power to take over mortgages and dispose of them through auction or sale.
It says there is also room for financial institutions to appeal to court when they cannot deal with the cases within their legal empowerment. ‘Therefore, there are legal set up and legal procedures already existing to recover loan and FIs should rely on these legal set up and legal procedures,’ says the report.
The report claims that with the start of the review of the issue and knowing that they are violating human rights of their customers, some financial institutions have on their own stalled publicizing their loan defaulters on national TV.
However, the paper found most FIs still threatening to publish pictures.
The report says given the existence of various mechanisms to recover loans, the practice of publicizing of loan defaulters with photographs on national TV and other social media by financial institutions themselves is recommended to be stopped.
It says that the final decision for the need to publicize either by the court or authorizing the financial institutions to do so should be left to the authority of law.
The HRC report was compiled after two rounds of meetings with the heads of various FI’s and also the Financial Institutions Association of Bhutan (FIAB).
The report says that from the FI’s side the main problem is that some people after defaulting on their loans are not traceable making it difficult for the FIs as they claimed that courts do not accept monetary suits without the proper address of the debtor.
The FIs also said that for banks to take over mortgage property they have to issue a maximum of three summons to defaulters and without an address it was difficult to serve these summons.
The HRC report says that despite the FI’s views there is a general view that the public are being harassed and threatened with the publication of their photos if a loan is not being paid. It says that there are already incidences of loan defaulters complaining to FIs arguing that their personal dignity and social status is put at stake both in the family and in the community.
MP Ritu Raj said that the argument by banks that they can’t trace loan defaulters and hence have to publish pictures is not genuine.
“The banks already have a lot of details including the CID card and etc which can be used to track people down. Moreover using a court order they can also use the police to track down such individuals,” said the MP.
Meanwhile, with increases in Non Performing Loans and the financial crisis of the last two years the mood in the Financial Sector is to go hard on loan defaulters.
Financial sector President of the FIAB and BNB MD Kipchu Tshering said that he did not agree with the NA that publishing pictures is a violation of Human Rights. He said, “It might be more related to privacy laws and Right to Information issues provided that there are such clauses which I am not aware of.”
He said there were other countries like Dubai which printed the pictures of debtors and even had provisions in the law to put them behind bars and execute them.
He said that Fundamental Rights are meant for people following the law and not meant for people who do not follow the law. He said that FIs put pictures only after not being able to trace defaulters. He said in courts it was a long process and even the police stopped searching sometimes.
The MD was of the view that the Parliament’s resolution might end up protecting ‘social criminals’ who did not pay their loans.
However, he said that once the resolution was circulated he and other FIs would have to abide by it and not publish any pictures.
The BIL MD Tshering Gyaltshen also said that his organization would abide by the resolution. He said that the notice to the media had been sent a few days before the resolution had been passed.
The MD said that a solution could be special Tribunal Courts to settle such issues quickly like the ones in India and Bangladesh. He said as normal court procedures are lengthy the interest builds up during the case. He stressed that FI’s are the backbone of the economy and any impact on them would also affect the economy.
The BDBL MD Pema Tshering who is also the FIAB Secretary General said, “We had two rounds of meetings with the HRC committee and also gave them a soft copy of the issues affecting the FIs. The HRC was supposed to get back one final time before finalizing their report but they never did that.”
He also listed out the various difficulties the bank had in tracking down loan defaulters and filing cases in court without the proper address.
He declined to comment on what would be his response once the resolution comes to him.
The T-Bank MD Tshering Dorji said that he was not aware of the resolution but would definitely abide by it once he formally received it either from the Parliament or the government.
The Finance Minister Lyonpo Namgay Dorji said, “Once we receive the resolution from the Parliament we will circulate it to all the Financial Institutions.”
Responding to a question on the recent advertisements being put by FI’s threatening to publish photos the minister said, “The FI’s henceforth will not be allowed to publish photos and if they do then they will be violating the law. They have to comply with the law.”
