Bad loans: banks send sleuths after defaulters
Private banks have begun hiring agents or setting up special teams to locate the assets and properties held by loan defaulters. The finance ministry too has directed public sector banks to take action against the wilful defaulters and focus on recovery.business Updated: Nov 12, 2013 00:06 IST
With the level of bad assets rising, banks have begun hiring agents or setting up special teams to locate the assets and properties held by loan defaulters. In some special cases, detective agents have also been engaged to fish out information on defaulters’ asset list.
The finance ministry has directed public sector banks to take action against the wilful defaulters and focus on recovery.
“Our bank is using the services of detective agents to identify the other assets of the borrowers in cases where there are no securities or shortfall in security,” M Narendra, chairman and managing director, Indian Overseas Bank told HT.
Private lenders are also adopting similar strategy to trace undeclared assets of defaulters.
“Often it is not known what assets and properties the defaulters own or whether they are not disclosing them, we have decided to get very stringent with our assessment and we are hiring agents and using various means to find out the financial status, assets held by the defaulters,” a senior executive at a private sector lender who did not wish to be identified said.
Government sources said that the banks have also resorted to legal options, which include the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, (Sarfaesi Act, 2002) — that gives power to banks and financial institutions to auction residential and commercial properties of borrowers when they fail to repay their loans.
The government is also monitoring the situation and banks have been asked to set up separate verticals to recover money from written-off accounts.