State-run banks take efforts to recover bad loans

In order to recover bad loans from borrowers, some public sector banks are putting pressure on the guarantors of wilful loan defaulters.

One such incidence happened when Allahabad Bank published a public notice exposing the guarantor of a borrower who defaulted on his loan.

The state-run bank published the photographs of two guarantors as well in the newspapers as part of a public notice for sale of two properties mortgaged for the loan.

This is an extension of state-run banks’ recent practice of defaming only the defaulting borrowers by publishing their pictures in newspapers and at other places around the areas of their residence.

Leading state-run banks SBI and UCO Bank, Allahabad Bank, Indian Bank and Indian Overseas Bank are at the forefront in taking such measures.

Some reports indicate that private banks may also follow suit in a bid to recover the rising bad debt. Till now, private banks mostly do not publish pictures of the loan defaulters or their guarantors, but they are also actively considering such ‘name and shame’ exercises.

The borrower, a corporate entity, had failed to pay it dues and the total outstanding amount currently stands at over Rs 365 crore.