Finding a way out on the Reserve Bank of India ’s notification of not shaming the loan defaulters,several banks are making innovative efforts to ensure loan repayments.
Dena Bank and Punjab National Bank are among those who are initiating a series of innovative measures, like home visits and TV ads involving children, in efforts to ensure defaulting borrowers repay loans.
These measures are coming after the RBI issued a notification (9 September) on publishing photographs of wilful defaulters. After this notification banks may not be able to name and shame defaulting borrowers as indiscriminately as before.
Dealing with RBI’s notification, banks on the other hand have come up with innovative ideas of ensuring repayment of loans.
A TV commercial by Dena Bank released on 15 September shows a daughter chiding her businessman father for wilfully defaulting on the loan and exhorting him to repay the bank, which has been the reason behind the family’s prosperity.
This TV commercial is part of the Rin Samadhan Campaign, a scheme introduced by Dena Bank in September, calling small borrowers with loan of up to Rs 2 lakh, agriculture borrowers up to Rs 10 lakh and remaining borrowers to settle their outstanding dues with the bank. The scheme allows partial waiver of loans provided the borrowers meet criteria laid down by banks.
Such emotional pleas are the latest in a series of measures from banks to force borrowers to repay.
Commenting on the latest measure of ensuring loan repayments,Dena Bank’s chairman and managing director Ashwani Kumar said that the idea behind the ad film is part of the larger strategy used by the bank to recover loans of less than Rs 5 lakh.
According to Kumar, a war room has been set up with 10 managers headed by a general manager, who will drive the loan recovery process, sitting in the bank’s headquarters in Mumbai.
“We wanted to show the younger generation, which aspires for a transparent and cleaner society, trying to influence the older generation,” said Kumar.
In the fiscal year 2016, Dena Bank posted a loss of Rs 935 crore due to a jump in bad loan provisions by 200%. The bank had made cash recoveries worth Rs 728 crore, wrote off loans worth Rs 759 crore and upgraded loans worth Rs 443 crore during the year. Kumar is confident that measures like the Samadhan Yojana will lead to improved recoveries for the current fiscal year.
PNB intensified recoveries after posting a record loss of Rs 5,367 crore in the March quarter with gross non-performing assets as a percentage of total assets hitting 12.9%, from 6.55% a year ago. The bank posted a net profit of Rs 306 crore in the June quarter, thanks to the increased thrust on recoveries.
