Private sector lender Federal Bank has been working on improving its loan recovery efforts by including new channels as well as strengthening its collection team.

The bank recently partnered with Magicbricks for the listing and e-auctioning of immovable properties repossessed through recovery proceedings. With this pan-India arrangement, it plans to sell or recover dues in 30 major accounts, amounting to ₹50 crore in the fourth quarter this year.

“We have possession of these properties where the borrower has not been able to meet the obligation. These are solely mortgaged to us,” said Ashutosh Khajuria, Executive Director and CFO, Federal Bank. He added that this is a new channel that the lender has opened up to strengthen recovery efforts.

Speaking to BusinessLine, Khajuria said that since December 2017, the lender has internally re-rated its recovery department every quarter.

“We created some sales force there — more people who could go and recover (collection agents) — and deployed some of our staff from other segments and activities because of centralisation of certain activities at the head office level. So we used the resources to strengthen our recovery team,” he said.

Earlier recovery efforts started only after the account turned non-performing. But in April 2018, the bank renamed the department as Loan Collection and Recovery department. It starts working from the first day of default of any account.

“From Day 1 of any default, their role starts — whether it is from our own customer care centres or... meeting or negotiating, the role of this department starts,” Khajuria said, adding that the result has been quite good till now. In 2018-19, the bank recorded cash recovery and upgrades of ₹965 crore, which was its highest ever.

Khajuria said this was one of the reasons the bank has managed to contain its gross non-performing assets at 3 per cent since 2011-12, and at 3.5 per cent on a quarterly basis.

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