Andhra Bank, Union Bank of India using dharnas and agitations to recover loans from erring borrowers

 It looked like any another dharna, a group of people standing outside an office building with placards demanding that the chairman of a retail business "pay our dues". Perhaps it was a group of workers demanding that their salary arrears be paid. But the giveaway was a big red banner that read Andhra Bank Employees' Union.

They were actually bank workers on a quest to recover loan repayments, only they were using a well-worn political strategy rather than taking the borrower to court Stock Market Trading Tips

Andhra Bank calls this Gandhigiri, a term borrowed from the 2006 Bollywood hit Lage Raho Munnabhai and meant to convey the adoption of non-confrontational means to achieve an end.

Some state-owned lenders, groaning under the burden of bad debt, are using such methods to shame customers —mainly small-value ones — to try and get them to cough up money they owe. It seems to be working.

"Some of them are very old accounts where no recovery efforts were made and it was possible due to the support from the union and the local police," said CVR Rajendran, former chairman and managing director of Andhra Bank, who retired on April 30 Financial Astrology Trading Tips

Under Rajendran, the bank recovered a total of Rs 1,700 crore in a year, amounting to 20% of the bank's total bad loans, some of it thanks to the kind of dharna described above. Since January, the bank has conducted around 900 recovery programmes.

United Bank of India has also used the dharna strategy effectively to recover dues, mostly across West Bengal, where it is based. In the quarter ended December, the bank recorded cash recoveries ofRs 194 crore and accounts to the tune of Rs 318 crore were upgraded — or moved up from the non-performing category as installment payments resumed.

That Rs 512 crore comprises 10% of United Bank's net non-performing assets (NPAs) of Rs 5,240 crore Intraday Trading Tips

"The dharnas for recovery of dues are so (effective) that some of the defaulters are now coming to us saying please do not do a dharna outside our house, we would start paying dues within a week's time," said P Srinivas, managing director and CEO of United Bank of India. The lender has spent almost a year chasing dues after being banned from giving big-ticket loans. It was among the first banks to engage its staff in dharnas and morchas for recovery of dues.

Of the 3.5 lakh account holders that got Andhra Bank's Gandhigiri treatment, it was able to convince as many as 1.5 lakh to repay their dues. The initiative covers loans of less than Rs 10 lakh, with the recovery amount at about Rs 12 crore Nifty Trading Tips

Those seeking repayments have used embarrassment as a weapon before. Some years ago, the Bruhat Bangalore Mahanagara Palike sent a bunch of people loudly beating drums to the offices of an IT company, seeking the recovery of property tax dues. About a decade ago, some lenders even sent transgender groups to defaulters for the same reason.

Banks say they seek to shame the borrower only when they are convinced that the person or the company has the ability to make payments but is consciously not doing so. Such action is also far removed from the more coercive methods that were once used against car loan and credit card defaulters Jackpot Trading Tips