THIS PSU bank to send 'sweets' to top loan defaulters on Diwali

State-run UCO Bank has decided to send 'sweet packets' to the top ten defaulters of every branch as part of its efforts to recover bad loans. In a circular to all zonal heads, UCO Bank's general manager (recovery) Dheeraj Patwardhan said that the lender cannot deny the fact that a customer presently classified as a defaulter was once a valued customer.

So, he said, "proper connect" with such customers may bridge the gap created between them and the bank. "Such activity may also create a situation of empathy and harmony compelling some of the borrowers to come forward to settle their account with the bank."

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"In view of the above, the top management has suggested for distribution of sweet packets to the top 10 NPA borrowers of each branch, in line with peer PSBS, like any other valued customers, where branch heads need to personally meet them, greet them on the occasion of Diwali and distribute them a sweet packet," the bank said in the circular shared by noted banking columnist Tamal Bandyopadhyay on X.

The zonal heads have also been advised to personally meet and greet the top 10 NPA borrowers of the zones on the auspicious occasion of Diwali. All the zonal heads have been asked to ensure strict compliance with the direction. After Diwali, account-wise reports of all the branches will be compiled by the zone and will be sent to the department at least by 15 November.

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In the advisory, Patwardhan said that recovery of dues from the borrowers is not an easy task and branch officials were facing numerous challenges in fields. He said time and again it had been observed that in general there was a deterioration in the bank-customer relationship once the account turned into an NPA (Non-Performing Asset).

The general manager said that it was not like each and every NPA borrower was a willful defaulter and did not pay the dues despite having sufficient repayment capacity. However, in some cases, he said, it had been observed that only the clash of ego between the customer and bank officials led to the account turning into the NPA.

The state-run bank reported an 80.80 per cent year-on-year (YoY) rise in net profit at Rs 223 crore for the first quarter of FY 2023 (April-June) compared with Rs 124 crore in the same quarter last year. The lender said its net interest income (NII) for the quarter rose 21.78 per cent YoY to Rs 2,009 crore from Rs 1,650 crore in the corresponding quarter last year.

The Bank's gross non-performing assets as percentage of advances stood at 4.48 per cent for the quarter compared with 4.78 per cent in March and 7.42 per cent in the year-ago quarter.

UCO Bank's shares rose 1 per cent to settle at Rs 37.84 on the BSE on Thursday.