SBI to get tough on loan defaulters--Business Line
MUMBAI, JUNE 25:
Faced with a Rs 51,000-crore bad loans pile, State Bank of India has decided to tighten the screw on defaulting borrowers.
How? It is taking recovery action, such as filing winding-up petitions against defaulting companies and their guarantors.
SBI wants its field staff dealing with recoveries to go after loan defaulters and wring out as much of the outstanding loan as possible.
A secured creditor files a winding-up petition in a High Court when the borrower fails to repay debt.
Winding up of a company is a process whereby its normal activities are brought to a standstill. The company’s property is administered by a court-appointed liquidator for the benefit of its members and creditors.
ON RECORD
To keep tabs on the pledged security, bank staff have been asked to take photographs of the properties during inspectionand keep them in the records, said a senior bank official.
SBI will take physical possession of the assets charged to it by the defaulters to preserve their value and realise the maximum amount from their auction.
Earlier, the bank used to just take symbolic possession of a pledged asset by pasting a notice that the property belongs to it. Defaulting borrowers sometimes take advantage of symbolic possession to sell off plant and machinery and other pledged assets.
The official said, the bank may consider acquiring some properties at the reserve price for its own use when their auction fails.
In the case of loan accounts classified as doubtful, up-to-date valuation of such accounts will have to be done so that they can be showcased to asset reconstruction companies (ARCs).
A loan account is classified as doubtful if it has remained non-performing for more than 12 months. ARCs are in the business of resolving non-performing loans bought from banks and financial institutions.
Due to economic slowdown, which has affected its borrowers’ ability to repay loans, SBI’s bad loans increased by Rs 11,513 crore in FY13 to Rs 51,189 crore as at March-end 2013.
In FY13, the bank saw a gross reduction of Rs 20,480 crore in bad loans. Fresh slippages amounted to Rs 31,993 crore.
BREAK-UP
A break-up of SBI’s bad loans portfolio shows that as on March-end 2013, mid-corporate segment accounted for 36 per cent of the total bad loans; small and medium enterprises (28.4 per cent); agriculture (19.8 per cent); retail (8.3 per cent); international (5.5 per cent); and large corporate (2 per cent).
South leads in financial inclusion, says Crisil report
Based on new index, study shows wide disparities in access to financial services
NEW DELHI, JUNE 25:
One out of every two Indians has a savings account, but only one in seven has access to bank loan. This is revealed in a report based on a new index of financial inclusion prepared by rating agency Crisil.
Released by Finance Minister P. Chidambaram, the report states that the southern region leads in financial inclusion with a Crisil Inclusix score of 62.2 in 2011.
The western region stands second with an score of 38.2, followed by the northern region (37.1), eastern region (28.6), and north-rastern Region (28.5).
Though overall index is just 40.1, which the report terms as low, the fact is that it has improved from 35.4 in 2009. The RBI provides the data used for index computation.
The report found that the number of saving accounts (624 million) is almost four times the number of loan account (160 million). It also said that 618 out of 632 districts reported an improvement in terms of financial inclusion. The top three States in terms of financial inclusion are Puducherry, Chandigarh and Kerala.
BIG DIFFERENCES
However, wide disparities exist across India and within States in terms of access to financial services. “India’s six largest cities have 11 per cent of the country’s bank branches while four districts have only one branch each,” the report states, adding that the bottom 50 districts have just 2 per cent of the country’s bank branches.
The new index intends to measure the extent of inclusion in India, right down to each of the 632 districts.
It uses a statistically robust and transparent methodology. It is a relative index on a scale of 0 to 100 and combines three parameters, branch penetration, deposit penetration and credit penetration, into one metric. Over time, as consistent and comprehensive data become available, additional services such as insurance and microfinance can be added.
“Besides measuring inclusion at the district, State and national levels, the index can be used to compute progress on financial inclusion by each bank,” said Roopa Kudva, MD and CEO, Crisil.
This index will enable policymakers, regulators, and bankers to identify priorities to improve financial inclusion, design focused initiatives to push the inclusion agenda and, most importantly, measure the progress made, she added.
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