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Concerned over rising bad loans, bankers have started publishing names and photos of guarantors of defaulted loans as well in newspapers. However, there is no clarification on the selection criteria of either the defaulter or guarantor
Close on the heels of banks publishing photos of borrowers who have defaulted, the lenders have decided to give same treatment to guarantors of such defaulted loans too. However, there is no clarity about the selection criteria of such guarantor, who has provided guarantee to a borrower for loan.
Banks, mostly public sector lenders have decided to ‘name and shame’ the guarantors of such borrowers as well by publishing their photographs and other details in newspapers and at notice boards of bank branches and community centres.
Several state-run lenders are at the forefront of taking such measures. Those already making public the photographs and other details of loan defaulters include the country’s biggest lender State Bank of India (SBI), UCO Bank, Allahabad Bank, Indian Bank and Indian Overseas Bank (IOB).
On Tuesday, Allahabad Bank published photographs of two guarantors as well in the newspapers as part of a public notice for sale of two properties mortgaged for the loan. The borrower, a corporate entity, had failed to pay it dues and the total outstanding amount currently stands at over Rs365 crore.
SBI began publishing the pictures of its individual loan defaulters in March this year, while UCO Bank has also went public with the name, photograph and other details of a well – known industrialist for non-payment of loans by his company.
Even the Bangalore Municipal Corporation has not hesitated to use traditional drum-beaters to shame some of India’s best corporate brand names into paying up property taxes. In January this year, it collected Rs19 crore from the IT giant Wipro Ltd, which paid up but has contested the claim. It has also successfully targeted five-star hotels, such as Le Meridien and Ramada Hotel, for a few lakhs of rupees.
According to bankers, the photographs, names and addresses of the guarantors would be published in newspapers if the dues were not cleared within 15 day of the notice containing particulars of the original borrowers.
Earlier this month, finance minister P Chidambaram asked banks to focus on top defaulters and take action against them. He said, “You (bankers) focus on the top defaulters, as well as keep an eye on the top performing accounts... They are keeping a close watch on the top 30 non-performing accounts in each bank and action will be taken on the defaulters,”
Non-performing assets (NPAs) of banks have been on the rise for past several months due to slowdown in the economy.
The gross NPAs of some public sector banks, including State Bank of India and Punjab National Bank have crossed 4% of the total assets at the end of March 2013.
Gross NPAs of PSU banks have risen to Rs1.55 lakh crore as on December 2012 from Rs71,080 crore as on March 2011.