SBI set to publish photographs of defaulters to force them to pay dues

Source :E T :4 FEB, 2012, 11.14AM IST, DHEERAJ TIWARI,ET BUREAU 



NEW DELHI: Country's largest lender State Bank of India will soon start publish photographs and names of wilful defaulters in leading publications as a last resort to get them to pay their dues. 


This comes at a time when banks are facing problem with recovery of loans in both corporate and retail segment. 


A senior bank official confirmed the development but said this will be used as a measure of last resort. "The idea is to discourage the public from defaulting on loans. We will send them notices before going ahead with such measures," he said. The bank will further ensure that name and photographs of only those borrowers will be published who have wilfully defaulted. "The permission will granted by the chief general manager of the circle after proper due diligence." 


As per RBI regulation, a 'wilful default' would be deemed to have occurred if there is a default in meeting of payment or repayment obligations to the lender even when the borrower has the capacity to honour the said obligations. A wilful default would also mean if the borrower has not utilised the finance from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes. 


A senior manager with the bank's stressed asset management group said that there was a feeling among bankers that the old practices of printing notices of insolvency was no longer a deterrent. 


"In the old days it used to be such a matter of family shame. These days nobody even notices in it the newspapers. So the fresh approach may ruffle a few feathers," he said, adding that the social pressure will be much more if those photographs and names appear in the local publications. 


The total bad loans for the bank till September 2011 was at 33,946 crore, as against 23,205 crore in the corresponding period last year. 


The total non performing assets in the Personal retail segment stood at 4,870 crore. 


A senior official with a south-based state run bank said that such move will increase the pressure manifold on the borrower. "Even if at the branch, the name and photograph of the person is there as defaulter, a large section who bank in that area will know," he said.


 Under the present regulations, such financial information is made only available to the other financial institutions which may have lend to the company or borrower besides the banking regulator RBI and to some credit information companies such as CIBIL.