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  • Category: Miscellaneous

    Can the banks recover their doubtful debts by reducing one percent interest on exiting accounts?

    While every bank would scrutinize and then sanction the big loans after taking into account the surety and the guarantors to that effect. In bank so many big accounts are maintained and many have been saving in their savings bank accounts. Normally our banks are healthy without any financial crunch. If at all they are facing a willful defaulter , his loan amount can be raised by deducting one percent interest on existing deposit holders and thus money has been recovered and the doubtful debt is waived. This is what all banks are doing as per a former banking officer who revealed this secret to the media.
  • #633131
    I think no. Those who have pre-planned to con the bank, will do so even if the interest rate is 1% per annum.
    Beware! I question everything and everybody.

  • #633134
    I think yes, the banks will recover their doubtful debts by reducing the interest rate. And I found nothing wrong every businessman do the same thing. Businessmen also recover their loss by increasing the profit on other items. So, it is the natural thing and nothing wrong.
    Honesty is the best policy.

  • #633142
    The wilful defaulters have nothing to do with the rate of interest. They may not return loan even if the interest rate is reduced to zero. Their interest lies in not returning the principle amount, not the interest on the principle amount.

    Taking loans from banks and not returning the same becomes a business or industry for them. They scout for greedy bank managers and cook a plan to siphon off the public money.

    It is only the small borrowers who bother for rate of interest and calculate EMI etc.

    Let us encourage each other in sharing knowledge.

  • #633256
    I think the author is talking about the rate of interest they are giving to depositors If my understanding is correct. But as far as the rate of interest is concerned to the depositors the banks can't take a decision on their own. The RBI will decide on these rates from time to time based on the financial conditions of the country and the inflation rates.
    But some banks can offer a one-time settlement to the defaulters as per the existing provision where in his dues will not attract any additional interest and the penalty can be waived off it the borrower come forward to settle his accounts within a stipulated period.
    This is what I understand from a discussion I had with one of my friends who works for a bank.

    drrao
    always confident

  • #633258
    Banks cannot take an opinion independently, because it is managed by the Reserve Bank of India. Banks cannot reduce the rate of interest without consulting with RBI. Banks need to do some cleaning in their NPA problems and they need to bring back glories otherwise people will lose their faith in the Banking system.
    "Earning knowledge is by sharing it with ISC and we will rectify our mistakes."

  • #633268
    For recovering its doubtful debts, banks have the power to lower the interest rates being paid on savings account and it has the tendency to fluctuate the income for the account holder.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #633291
    I fully agree with the first para in #633142. Wilful defaulters have defaulted wilfully only. Others who had faced some genuine problems post borrowing will sit with the banks and request for some relief-either time or interest.
    Banks have the system of re-phasing the loans or one-time settlement with some relief terms if the borrower is not a wilful defaulter , is genuine and is willing to repay the loan sincerely. Banks may even 'nurse' the loans to bring back them to health if they are fit to be so.

    But for all this, there are certain laid out guidelines decided by the bank board or govt or RBI. Individual managers cannot take arbitrary decisions.
    There are 'Lok Adalats 'which have legal status and finds a via media with the lender and borrower to facilitate repayment of the loan with possible compromise genuine cases.

    In most of the big ticket loans, there already would have been influences and pressures for the least possible interest also. In such cases even half a percent difference makes very high effect to the bank or lender-this way or that way. But when taking the whole situation inits overall dimensions, banks may also be willing to give some concession rather than losing everything. Unfortunately there are many who plan and wait for this and exploit the situation.

    If the banks stop their cut-throat competitions for business and share the information about the borrowers and conduct of accounts, and banks do not fix unrealistic business targets,then a lot of NPAs and bad loans can be prevented. It also need to be dome legally that the directors and not different from the company, but responsible like a proprietor legally.

    All this need political will.


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