A recent press report said that the Indian Banks’ Association (IBA) has warned banks not to go overboard in their effort to recover bad loans. This caution has been made after the act of some state-run lenders such as Corporation Bank and the State Bank of India displaying the photographs of defaulting borrowers at their branches, in their keenness to recover bad debts.
The IBA said that such a method could create stress on borrowers which could backfire and it also said that there were past instances when borrowers committed suicide due to aggressive recovery procedure adopted by banks, which led to the lender being dragged to court. Reports said that banks have decided to display photos of only willful defaulters. It also said that industry bodies protested saying banks were being unfair to their clients.
However, defending its loan recovery method, Corporation Bank chairman and managing director Mr. Ramnath N. Pradeep said that if the borrowers can adopt different means to avoid payment of loans, the bankers can also adopt ways to recover loans. He added saying that the bank has recovered over Rs 200 crore from written-off accounts and that the bank was not targeting farmers and poor borrowers in the recovery drive. The bank is involved in offering home loan, business loans, education loan, vehicle loans etc.