It is generally believed and stated that banks offer loans only to those who do not need it – reason – credit worthiness as ascertained through a thorough internal process . If this is true , how come many financial institutions and credit card companies resort to writing off bad debts from their books instead of going for legal recourse to recovery ? . One obvious reason is the prohibitive costs of lawyer fee and statutory fee to the courts .
How do they prevent this cost ? . In their enthusiasm to deploy funds and turn them over many times , the employees who work in those institutions sell aggressively loans to people and organizations without due scrutiny and it is said that some staff resort to mass ‘ robo-signatures ‘ in multiple copies of forms to meet the sale targets . While the ” fine print ” is supposed to trick the buyer , the work load in processing at times boomerang on the organization itself – the case of process defeating the very purpose intended .
It is high time the so called ” money bags ” realize the first principles of cost of capital and net present value of cash. The pursuit of debt will otherwise be a lawyer’s treasure trove !