PUNE: State Bank of India, the nation’s largest lender, has devised an innovative strategy to ensure timely repayments, particularly from its retail borrowers. To address the issue of borrowers who are likely to default on their monthly installments, the bank is delivering a surprise visit to their homes, accompanied by a package of chocolates.
The bank has discovered that borrowers who plan to default often ignore reminder calls. Consequently, the most effective approach is to personally meet them at their residences without prior notice. This proactive measure aims to enhance the bank’s collection efforts, as retail lending levels continue to rise alongside an increase in delinquency rates, which can be attributed to the upward movement in interest rates.
SBI’s retail loan book witnessed a growth of 16.46% to reach ₹12,04,279 crore in the June 2023 quarter, compared to ₹10,34,111 crore in the corresponding period of the previous year. This significant growth establishes retail loans as the largest asset class for the bank, whose total book stood at ₹33,03,731 crore, representing a year-on-year growth of 13.9%. It is noteworthy that the double-digit loan growth of approximately 16% across the entire system is primarily driven by retail loans.
SBI is currently conducting a pilot with two fintech companies that leverage artificial intelligence (AI) to remind retail borrowers of their repayment obligations. One fintech focuses on reconciliation with borrowers, while the other alerts the bank regarding the likelihood of a borrower defaulting. Representatives from these fintech firms visit borrowers who are at risk of default, bearing gifts of chocolate to remind them about their upcoming EMIs.
Surprising them with an unexpected visit is deemed the most effective method. Tewari highlighted that the success rate thus far has been overwhelming. Although Tewari refrained from disclosing the names of the fintech firms, he mentioned that the initiative is currently in the pilot stage and was implemented approximately 15 days ago. If successful, the bank plans to make a formal announcement. Furthermore, SBI is engaging in discussions with several other fintech companies to enhance its collection efficiencies. The bank aims to establish partnerships with at least half of these fintech firms by the end of the year. Tewari emphasized the bank’s intention to continue the pilot for a duration of four to five months. SBI’s retail book, exceeding ₹12 lakh crore, comprises personal, auto, home, and education loans. With a home loan book of over ₹6.3 lakh crore as of June, SBI additionally holds the position of the largest mortgage lender.
