The Public Sector, Punjab National Bank (PNB) which has been under the microscope since January 2018 after diamond merchants, Nirav Modi and Mehul Choksi decamped without paying millions they had borrowed against PNB’s Letter of Undertakings (LoU), is expected to recover around Rs 1,800 crore from its Non-Performing Assets (NPAs) recovery mechanism – “Mission Gandhigiri.” Lunched in 2017, this initiative is now set to complete one year of operation.
According to a senior bank official, the mission has consistently delivered positive results with an average recovery of Rs 150 crore from the initiative.
“The mission was born out of the need to name and shame defaulters to increase societal pressure and urge them to pay back. “Mission Gandhigiri” has a dedicated recovery team across all circles of the bank,” the official informed the media.
Accordingly, the passive recovery mechanism entails the team members to “visit the borrowers’ office or residence and sit there silently with placards with messages such as, ‘It is public money, please repay the loans’.”
On the legal side of the operation, following the government’s directions regarding willful defaulters, the bank has declared 1,084 willful defaulters.
“Due to PNB’s aggressive stance towards willful defaulters, 150 passports have been impounded over the past few months,” the official said. Additionally, over the last nine months, the bank has also lodged 37 FIRs against defaulters.
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The bank is also leveraging data analytics for loan recovery and risk management.
“We have tied up with a leading credit agency and with the help of a third-party expert analytics, we will now be able to get access to contact information of PNB defaulters who have good credit record with other lenders,” the official said.
“This partnership is a part of the larger strategy to deploy technology to strengthen internal systems. This partnership will not only help the bank with loan recovery but will also help identify and automate profitable lending strategies and minimize credit and fraud risk,” the official said.
The bank has also recently started works towards “improving internal systems by incorporating analytics and Artificial Intelligence for reconciliation of accounts”.
In addition, two special OTS (One-Time Settlement) schemes have helped the bank to accelerate NPA recovery.
“From an average of recovering loan amount from 70,000-80,000 NPA accounts in a year, this move has resulted in recovery in 225,000 NPA accounts over a span of 10 months,” the official added.
“These schemes apply to small NPA accounts helping defaulters come out of debt.”