State Bank of India, the country’s largest lender, is taking an innovative approach to ensuring prompt repayments, particularly among retail borrowers, by greeting individuals who are likely to default on monthly installments with a box of chocolates.
According to the bank, a borrower who intends to default will not respond to a reminder call from the bank. So seeing them at their homes unannounced is the greatest option.
The measure, aimed at improving collections, comes amid rising levels of retail lending in the system as well as rising delinquency levels due to interest rate increases.
SBI’s retail loan book increased by 16.46 percent on year to Rs 12,04,279 crore in the June 2023 quarter from Rs 10,34,111 crore the previous year, making it the lender’s largest asset class. The entire book was at Rs 33,03,731 crore, up 13.9 percent year on year.
In reality, retail loans have driven the whole system’s double-digit loan growth of roughly 16 percent.
The managing director in charge of risk, compliance and stressed assets at SBI, Ashwini Kumar Tewari, stated, “With two fintech that use artificial intelligence, we are piloting a novel way of reminding our retail borrowers of their repayment obligations. While one is doing conciliation with borrowers, the other is alerting us on the propensity of a borrower to default. And to such borrowers who are likely to default, the representatives from this fintech will visit them, carrying a pack of chocolates for each of them, and remind them of the forthcoming EMIs”.
According to Tewari, this new strategy of taking a pack of chocolates and personally visiting them is used since it has been discovered that a borrower who is about to default will not answer a reminder call from the bank.
“So the best way is to meet them at their own homes unannounced and surprise them. And so far, the success rate has been overwhelming”, Tewari claimed.
Tewari refused to name the fintech, claiming that the move is still at the pilot stage and it was implemented only around 15 days ago and that if successful, we will formally announce it.
Tewari further stated, “We are also talking to a few other fintech to improve our collection efficiencies, and hopefully by the end of the year, we will have formally tied up with at least half of them”, adding, “We want to continue the pilot for at least four to five months”.
Personal, auto, housing, and education loans account for more than Rs 12 lakh of SBI’s retail book. SBI is also the largest mortgage lender, with a house loan book of approximately Rs 6.3 lakh crore as of June.
Also read: Kim Jong Un’s Russian Gifts: Drones And A Bulletproof Vest
