To expedite the recovery of bad loans, State Bank of India is planning to train some of its officers on ways to follow the money trail, especially in cases of diversion and siphoning-off of funds by borrowers.

Further, select officers and a majority of the bank’s business correspondents (BCs) will be given training as debt recovery agents.

This move to train officers and BCs comes in the backdrop of India’s largest bank facing the Herculean task of having to tackle bad loans aggregating about ₹60,000 crore as on June-end this year.

According to PK Malhotra, Deputy Managing Director, SBI is looking to train its officers in forensic audit.

“It (forensic audit training) will be elementary. Because most of our bankers are qualified CAIIBs (Certified Associate of the Indian Institute of Bankers), they have very good knowledge of book keeping, financial management and so on.

“So, it is only a slight nudge in one direction for getting the officers into forensic audit… As a result, I’m sure we will be declaring many more people (borrowers) as wilful defaulters,” he said.

A wilful defaulter, according to the Reserve Bank of India’s (RBI) definition, is a borrower who deliberately does not pay his dues despite possessing adequate cash flow and good networth and siphons off funds to the detriment of the defaulting unit.

Such a defaulter also sells off assets purchased with bank loans and wrongly utilises the proceeds, misrepresents/ falsifies records, and resorts to fraudulent transactions.

Once a borrower is declared a wilful defaulter, he/she is debarred from accessing institutional finance. Also, banks and financial institutions can effect a change of management at the wilfully defaulting borrower’s unit and prevent the borrower and his unit from gaining accessing to the capital market.

“What we are trying to do is to train our people in legal procedures and in some kind of investigative audits,” said Malhotra.

The Indian Institute of Banking and Finance will conduct the debt recovery agent (DRA) training for officers and BCs from October 1 at the bank’s many rural self-employment training institutes spread across the country.

BCs are agents of banks meant to foster greater financial inclusion by increasing the bank’s outreach.

Many of SBI’s 50,000-odd BCs will undergo DRA training for making recoveries from those small borrowers who have defaulted agricultural and rural loans. About 300 officers, who are dealing with bad loans, will also be given this training for making recoveries on slightly larger loans.

The bank is looking to tie up with an accounting firm for training its officers in forensic audit.

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