On July 3, 2013, Union Finance Minister P. Chidambaram told a press conference, after a meeting with heads of public sector banks and financial institutions, that he had asked the banks to focus on the top 30 non-performing accounts and take action against defaulters.
Earlier this year, banks, mostly public sector lenders, decided to tighten their noose on wilful loan defaulters by resorting to the tactic of ‘name and shame’. They began publishing the names and photographs of the defaulters and their guarantors in newspapers, on notice boards of bank branches and community centres, and around their residences.
The move represents a fresh crackdown to recover loans by inducing wilful defaulters to pay up and avoid further embarrassments.
In early July, 2013, Allahabad Bank published in newspapers a public notice for the sale of two properties – one in Haryana and the other in Mumbai – mortgaged to it. This notice named the borrower – a group corporate entity, that had a total outstanding amount at over Rs 365 crore, and featured photographs of its two guarantors.
UCO Bank has also gone public with the name, photograph and other details of a well- known industrialist for non-payment of loans by his company.
State Bank of India began publishing the pictures of its loan defaulters in March, 2013. It went a step ahead by displaying on a large notice board the names, photographs and other details of many defaulters of student loans along with their guarantors. This move by SBI has enraged the student population of Tamilnadu.
The above poster on display outside the SBI branch manager’s cabin in Bodinayakanur, Theni district, Tamilnadu, is now being shared by students on Facebook and has unleashed a campaign that questions the “ethics”of SBI in targeting poor defaulters but letting wilful defaulting millionaires off their noose.
According to RBI guidelines, willful defaulters are mostly borrowers who deliberately avoid payment of dues despite having an adequate cash flow and high net worth. Essentially, they have the funds to pay back the loan but refuse to do so even as they lead a lavish lifestyle and enjoy a false social status.
The Students Federation of India (SFI), MPs Tamaraiselvan (DMK) and Thol. Thirumavalavan (VCK ) have taken up the grievance of students.
- Focus on top 30 defaulters: Chidambaram (business-standard.com)
- Banks to ‘name and shame’ guarantors for loan defaulters (thehindu.com)
- ‘Name and shame’ loan defaulters: Banks adopt new tactic to embarrass debtors by printing their names and photos in newspapers and around their homes (dailymail.co.uk)
- Bank shames student-defaulters on flex board (deccanchronicle.com)