To recover dues, public sector banks are holding placards in front of companies, visit villages and announce defaulters names by beating drums
Banks are literally taking the battle against bad loans to the streets. The rising bad loans in the banking sector have now forced the employee unions of at least three banks to undertake a silent revolution to get back the money.
With 30 defaulters accounting for more than one-third or 36.5% of the entire non-performing assets (NPAs) of public sector banks (PSBs) aggregating to Rs 95,122 crore as on December 2014, employees of Andhra Bank, Corporation Bank and Indian Overseas bank are leading the drive to recover loans by marching at the doorstep of the defaulting borrower's homes and offices.
Big banks such as State Bank of India (SBI) are expected to join these banks to launch coordinated action against borrowers common to the lenders.
CVR Rajendra, chairman and managing director, Andhra Bank, told dna, "In Andhra Bank, employees, who had planned to do recoveries in one lakh accounts, have already completed recoveries in 85,000 accounts and more actions are being planned in co-ordination with bigger banks like SBI." Andhra Bank had gross bad loans of Rs 7,118.13 crore at the end of the third quarter ended December 31, 2014.
Three companies, where bank employees stood in front of their offices with placards demanding repayment of loans, are GTL Infrastructure in Dadar in Mumbai, Chennai-based Empee group which is into sugar and hotel business and Jeypore Sugars in Chennai. In case of Empee group, the bank has a loan outstanding of Rs 120 crore ad Rs 80 crore dues from Jeypore Sugars.
The bank unions are also going to villages to create awareness on non-payments by beating drums and announcing the names of defaulters on loud speakers. So Suddenly, if you hear drum beats in your neighbourhood, don't mistake it for a marriage procession, it may just be that a bunch of bank employees are trying to get back the money that you owe them.
Chennai-based Indian Overseas Bank (IOB) is also adopting similar strategies. For example, in many villages, the bank is hiring a jeep with a loud speaker announcing the names of the defaulting borrowers. The gross NPAs or bad loans of the public sector banks are at a whooping Rs 2,60,531 crore as on December 2014, according to a written reply submitted in the Rajya Sabha by minister of state for finance, Jayant Sinha, on March 17.
The bad loans are malaise for the public sector banks. The minister for state for finance told Rajya Sabha on March 17 the gross NPA of the public sector banks are a whopping Rs 260, 531 crore at the end of third quarter ended December 31, 2014. Big banks like SBI had gross bad loan outstanding of Rs 61,991.45 crore, Canara Bank (Rs 10,573.57 crore), IDBI Bank (Rs 12,140 crore) and Indian overseas Bank (Rs 14,500.51 crore) of bad loans during this period.
In comparison, the bad loans of private banks seem a pittance with the largest private lender ICICI having bad loans of Rs 13,082.62 crore. While Axis Bank's NPAs stand at Rs 3,901.59 crore, HDFC has Rs 3,467.91 crore.
Radha Venkatakrishnan, chief financial officer, Indian Overseas Bank, told dna, "The bank has delegated power to the branch manager to settle small value accounts. Employees are going around in the villages creating awareness by hiring jeeps and announcing the names of the borrowers. After this recovery, camps are held giving an opportunity for defaulting borrowers to repay the loans."
Corporation Bank is also taking coordinated efforts for loan recovery by organising NPA recovery camps where the bank is using similar strategies. The gross bad loans for the bank at the end of the third quarter was Rs 6,932.08 crore.
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