SBI to send chocolates to borrowers who are likely to default on repayments
The largest public sector lender has found that a borrower who is planning to default will not answer a reminder call from the bank. So the best way is to meet them at their homes unannounced.
- Sep 17, 2023,
- Updated Sep 17, 2023 8:18 PM IST
The State Bank of India (SBI) will send a pack of chocolates to those borrowers who are likely to default on monthly installments, news agency PTI reported on Sunday. The largest public sector lender has found that a borrower who is planning to default will not answer a reminder call from the bank. So the best way, the bank believes, is to meet them at their homes unannounced.
The move is aimed at ensuring better collections as retail lending has grown. SBI's retail loan book grew over 16.46 per cent to Rs 12,04,279 crore in the June 2023 quarter from Rs 10,34,111 crore in the year-ago period.
Ashwini Kumar Tewari, in charge of risk, compliance, and stressed assets at SBI, said that with two fintechs that use artificial intelligence, the bank is piloting a novel way of reminding its retail borrowers of their repayment obligations.
"While one is doing conciliation with borrowers, the other is alerting us on the propensity of a borrower to default. And to such borrowers who are likely to default, the representatives from this fintech will visit them, carrying a pack of chocolates for each of them, and remind them of the forthcoming EMIs," he said.
Tewari said that this method of carrying a pack of chocolates and personally visiting the borrowers is adopted because it had been found that a person who is planning to default will not answer a reminder call from the bank. So the best way is to meet them at their own homes unannounced and surprise them. And so far, the success rate has been overwhelming, he said.
The bank officer refused to name the fintechs saying the move is just at the pilot stage and has been put into place just about 15 days back and "if successful, we will formally announce it".
"We are also talking to a few other fintechs to improve our collection efficiencies and hopefully by the end of the year, we will have formally tied up with at least half of them," he said, adding, "we want to continue the pilot for at least four to five months".
SBI's over Rs 12 lakh crore of the retail book consists of personal, auto, home, and education loans. With a home loan book of over Rs 6.3 lakh crore as of June, SBI is the largest mortgage lender too.
In March this year, the Ministry of Finance said that major banking reforms undertaken by the central government over the last eight years addressed credit discipline, responsible lending, and improved governance, besides the adoption of technology, an amalgamation of banks, and maintaining the general confidence of bankers.
As a result of the implementation of reforms, the ministry said the performance of PSBs has significantly improved. "Asset quality has improved significantly with the Gross NPA ratio of PSBs declining from the peak of 14.6 per cent in March 2018 to 5.53 per cent December 2022," MoS Finance Bhagwat Kisanrao Karad said in a written reply to a question in Lok Sabha.
Karad said that the capital adequacy ratio of PSBs had improved significantly from 11.5 per cent in March 2015 to 14.5 per cent in December 2022. "All PSBs are in profit with aggregate profit being Rs 66,543 crore in the financial year (FY) 2021-22, and profit continued with PSBs earning aggregate profit of Rs. 70,167 crore in first nine months of FY 2022-23."
(With inputs from PTI)
The State Bank of India (SBI) will send a pack of chocolates to those borrowers who are likely to default on monthly installments, news agency PTI reported on Sunday. The largest public sector lender has found that a borrower who is planning to default will not answer a reminder call from the bank. So the best way, the bank believes, is to meet them at their homes unannounced.
The move is aimed at ensuring better collections as retail lending has grown. SBI's retail loan book grew over 16.46 per cent to Rs 12,04,279 crore in the June 2023 quarter from Rs 10,34,111 crore in the year-ago period.
Ashwini Kumar Tewari, in charge of risk, compliance, and stressed assets at SBI, said that with two fintechs that use artificial intelligence, the bank is piloting a novel way of reminding its retail borrowers of their repayment obligations.
"While one is doing conciliation with borrowers, the other is alerting us on the propensity of a borrower to default. And to such borrowers who are likely to default, the representatives from this fintech will visit them, carrying a pack of chocolates for each of them, and remind them of the forthcoming EMIs," he said.
Tewari said that this method of carrying a pack of chocolates and personally visiting the borrowers is adopted because it had been found that a person who is planning to default will not answer a reminder call from the bank. So the best way is to meet them at their own homes unannounced and surprise them. And so far, the success rate has been overwhelming, he said.
The bank officer refused to name the fintechs saying the move is just at the pilot stage and has been put into place just about 15 days back and "if successful, we will formally announce it".
"We are also talking to a few other fintechs to improve our collection efficiencies and hopefully by the end of the year, we will have formally tied up with at least half of them," he said, adding, "we want to continue the pilot for at least four to five months".
SBI's over Rs 12 lakh crore of the retail book consists of personal, auto, home, and education loans. With a home loan book of over Rs 6.3 lakh crore as of June, SBI is the largest mortgage lender too.
In March this year, the Ministry of Finance said that major banking reforms undertaken by the central government over the last eight years addressed credit discipline, responsible lending, and improved governance, besides the adoption of technology, an amalgamation of banks, and maintaining the general confidence of bankers.
As a result of the implementation of reforms, the ministry said the performance of PSBs has significantly improved. "Asset quality has improved significantly with the Gross NPA ratio of PSBs declining from the peak of 14.6 per cent in March 2018 to 5.53 per cent December 2022," MoS Finance Bhagwat Kisanrao Karad said in a written reply to a question in Lok Sabha.
Karad said that the capital adequacy ratio of PSBs had improved significantly from 11.5 per cent in March 2015 to 14.5 per cent in December 2022. "All PSBs are in profit with aggregate profit being Rs 66,543 crore in the financial year (FY) 2021-22, and profit continued with PSBs earning aggregate profit of Rs. 70,167 crore in first nine months of FY 2022-23."
(With inputs from PTI)