In a groundbreaking move, the State Bank of India (SBI) has adopted an unconventional strategy to recover non-performing accounts (NPAs), achieving significant success. Through the distribution of sweets and personalized counseling sessions, SBI has successfully upgraded nearly 60 NPAs, constituting approximately 13% of the total accounts involved in the pilot project in collaboration with fintechs for resolution.
A senior official disclosed, “The pilot has been remarkably successful, and we are eager to expand it.” The innovative approach involves sending boxes of sweets to NPA borrowers, aiming to prompt a positive response. Traditionally, borrowers tend to reject repayment notices, but this unique method has proven highly effective. SBI is currently partnering with two fintechs in this recovery model, leveraging their ability to engage with NPA borrowers, offer sweets, and provide expert counsel on loan repayment.
The official highlighted the fintechs’ role as excellent counselors, suggesting that they establish more effective connections with customers than traditional bank officials. Out of the 450 accounts included in the pilot, fintechs successfully reached 200 NPA borrowers, leading to 60 account holders accepting repayment proposals and transitioning from NPAs to “standard accounts.” This innovative method not only upgrades accounts but also circumvents the legal route, fostering a positive relationship between the bank and borrowers.
SBI aims to formalize a policy regarding partnerships with fintechs for such recovery mechanisms and plans to inform the Reserve Bank of India (RBI) about this inventive approach. The bank has conducted pilots for nearly two months and anticipates shaping the policy within the next 30-60 days. In the latest quarter, SBI’s gross NPA improved, underscoring the success of these inventive strategies. While SBI progresses with its unique sweet-centric recovery approach, it’s worth noting that another public sector lender, UCO Bank, recently withdrew a similar circular emphasizing personal interaction and sweet offerings to top NPA borrowers during Diwali.
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