Money & Banking

Banking executives hit the streets to sell products, recover loans

K Ram Kumar | | Updated on: Apr 17, 2018
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Bhaiyya home loan ley lo , home loan… Home loan dena aur home loan lena hua bohot hi aasaan ” (Brother, take home loan…giving and taking home loan has become very easy), shouts an executive of Indiabulls Housing Finance in what looks like a busy office area, probably in the National Capital Region, going by the number plate on a two-wheeler seen in a WhatsApp video that has gone viral.

An executive, apparently from Dena Bank, is seen in another video announcing on a megaphone in a housing society: “ Hamare bank se ek grahak paise liye hain loan ke roop mein aur woh loan wapas nahin karr rahein hain… ” (A customer has taken a loan from our bank but is not repaying the same).

Even as he requests loan repayment, the executive lets out a warning that if it does not materialise by Monday, the customer would be named and shamed.

Call it “over-enthusiasm” or “pressure to meet business targets”, employees of financial intermediaries seem to be taking a leaf out of what vegetable vendors do best – shout loud and clear about what they have to sell.

An uncommon practice

While it is common for push cart vendors to do so to attract the attention of people to their wares – vegetables, fruits, steel utensils, and garments, among others – it is uncommon to see financial products being sold in this fashion.

The move by employees of financial intermediaries to hit the streets is apparently due to heightened competition as lenders, be it banks or non-banking finance companies, have piled in to the retail lending bandwagon due to a slowdown in the corporate lending segment, which has seen a huge rise in non-performing loans.

According to the Reserve Bank of India’s data on sectoral deployment of gross bank credit, personal loans – comprising loans for consumer durables, housing, vehicles, education and other personal loans – rose by a robust 20 per cent year-on-year as of January 19, 2018, while advances to industry (micro & small, medium and large enterprises) nudged up just 1.1 per cent.

Lenders’ keenness to push home loans is underscored by the fact that gross non-performing advances (GNPAs) ratio for housing finance assets remained flat at 1.55 per cent in September 2017.

According to the Financial Stability Report, the retail housing segment does not appear to pose any significant systemic risks in the Indian context at present.

The GNPA ratio of large borrowers, as per the report, increased to 15.5 per cent in September 2017, from 14.6 per cent in March. A large borrower is defined as one who has aggregate fund-based and non-fund based exposure of ₹5 crore and more for Scheduled Commercial Banks.

Published on April 19, 2018

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