Are you a social media buff? Are all your loan instalments being paid in time? If not, watch out!
Several banks have started using social networking sites such as Facebook and LinkedIn to hunt down loan defaulters, particularly for education, personal or consumer durable loans.
Internet job sites are also often tapped to find out where such ‘missing persons’ who have defaulted on loans might have found employment.
It doesn’t end here. Recovery agents also visit cooking gas dealers to enquire about your whereabouts and whether you have relocated to another locality or city.
With economy slowing and inflation biting, the share of non-performing assets (loans that stop yielding interest) in bank portfolios have risen considerably. NPAs from education loans constitute more than 5% of all NPAs, up from only 2% four years ago, bankers say.
“We are extensively using social network like Facebook to locate borrowers whose present locastion is unknown, especially education loan borrowers,” M Narendra, chairman, Indian Overseas Bank told HT.
Worried banks are juggling between making their lending prudent on the one hand, and complying with the finance ministry’s desire to ensure that education loans are easily available for students. In case a application is rejected, banks are obliged to give a detailed explanation.
“Often borrowers of education loans are difficult to track as repayment starts after a certain period, and in several cases, they shift their base. Social media often come handy here,” said Ashwani Rana, general secretary of the National Organisation of Bank Workers.