SBI To Visit With Chocolates As An Alarm To Borrowers' Home On EMI Default

According to PTI, the largest lender in the country, State Bank of India (SBI), would give a package of chocolates as a pleasant surprise to anyone who could be in trouble of missing an EMI installment. According to the bank's research, borrowers who intend to default regularly ignore reminder calls from the bank. Therefore, making unexpected house visits is the best course of action. This strategy, intended to improve collection operations, is being put into place in response to the financial system's expanding retail lending market, which is also accompanied by an increase in delinquency levels because of rising interest rates.

Ashwini Kumar Tewari, Managing Director in charge of risk, compliance and stressed assets, SBI said, "With two fintechs 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 PTI.

According to Tewari, this innovative approach of delivering a pack of chocolates and making personal visits is implemented because it has been observed that a borrower contemplating default is unlikely to respond to a reminder call from the bank. Therefore, the most effective strategy is to make unannounced home visits and take them by surprise. Thus far, the results have been remarkably successful.

According to Tewari, this novel method of carrying a pack of chocolates and personally visiting them is adopted because it has been found that a borrower who is planning 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, he said, as per a PTI report.

Tewari refused to provide the names of the participating fintech firms, claiming that the programme is still in its trial phase and was just started around 15 days ago. He said they would make an official statement if it turned out to be a success.

Tiwari added, "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. We want to continue the pilot for at least four to five months," according to PTI.

In the June 2023 quarter, the bank's retail loan portfolio grew by a strong 16.46%, to Rs 12,04,279 crore, up from Rs 10,34,111 crore in the same quarter the previous year. The bank's overall portfolio was at Rs 33,03,731 crore, representing a 13.9% year-on-year gain, and this growth cemented its position as the lender's largest asset class. Personal, auto, home, and educational loans are just a few of the loan types included in SBI's retail portfolio, which totals more than Rs 12 lakh Cr. SBI has the title of being the nation's largest mortgage lender as well, with a home loan portfolio of more than Rs 6.3 lakh crore as of the June 2023 quarter, as per a report from PTI.