Slowdown blues: Professionals top list of defaulters

The banking institutions issuing loans to the corporate professionals and students pursuing professional courses have received a setback due to the massive lay offs and declining placements. These ‘professionals’ have emerged as the prime defaulter in the view of ongoing slowdown during the last six months. The banks were already facing a host of liquidity concerns for past two quarters. Special recovery teams have been swiftly constituted to initiate legal actions against the defaulters. According to an official from the State Bank of India (SBI), around 800 debtors have been declared defaulters in the last six months, jeopardizing over Rs 37 crore doled out by the bank in Kanpur. “We have issued legal notices to the debtors who have defaulted on more than three consecutive installments and the defaulter can file his/her explanation within the stipulated period,” said D K Aggrawal, recovery cell chief manager, SBI. Allahabad Bank Executive Director S K Dua agrees that the slowdown has affected the debt recovery adversely, while the major chunk of defaulters comprises the educational loans. According to sources, around Rs 2.5 crore of debt is lying unpaid, of which 1,648 defaulters are educational debtors. He further explained that the debtor can approach first the joint registrar of the bank and then the high court if he/she did not agree with the recovery order adding that procedures of the cell were quasi judicial in nature. The banks are struggling hard to keep their non-performing assets (NPA) below 10 per cent as per the Reserve Bank of India (RBI) guidelines. The debtors, on the other hand, are complaining about the absence of effective debt relief measures by the government, on the line of industrial relief packages. “There is an urgent need for a financial package for the students who are not being able to repay the educational loans due to slowing job market,” said Suresh Bhatt, national secretary, Akhil Bhartiya Vidyarathi Parishad. Dua said the banks are not in a position to waive the crores of rupees lying unpaid by these professionals. “If the debtor is not in a position to repay, the guarantor or the family kin should make the payment,” he said. SBI officials believe that most defaulters are deliberately delaying the payments, on pretext of recession. “A number of the debtors are working abroad after taking the loans and are clearly in a position to repay the debts,” he said.