The Hindu Business Line : KVB engineers loan repayment solution for troubled borrowers

After learning that some customers (mostly engineers) who had availed themselves of home loans are in a fix as they have either lost their jobs or are facing a drastic cut in salary, the bank decided to talk to the borrowers to understand their position and adjust accordingly.

“Some of these people were not in a position to remit their dues on time, and had even started to default. We convened a customer meet, but found that these white-collared youngsters were ashamed to admit their problems,” said the KVB Managing Director, Mr P.T. Kuppuswamy.

The bank then instructed its branch heads and divisional managers to talk to such customers individually and sort out the issue.

“We were able to get such customers to talk after some persuasion. We offered to give them a holiday period if they wanted one or permit them to pay smaller amounts now and repay the balance when the situation improves,” Mr Kuppuswamy told Business Line.

The bank has proactively supported 60-70 home loan borrowers in Bangalore alone.

“Our Koramangala Branch took a hit with nearly 15-20 borrowers pushed to the extreme. We have restructured loans for some borrowers in Chennai too,” he said. The value of the restructured loan should be Rs 10-15 crore.

Asked why the bank did not think of taking possession of the property, he said, “Quite a number of flats are up for sale in Bangalore. The supply glut would have further pulled prices down. Further, we did not want to take possession of a property that our customer probably invested in as a life-time acquisition,” he said.

Admitting that stressed accounts and NPAs were on the rise, the MD said: “We need to develop a national culture of repaying loans. Instead of going into hibernation, the borrower should explain his difficulty to the banker and get his loan restructured. On our part, while we are keen to rescue the borrower, we also have to ensure the integrity of the party.”

He said the bank was tightening its norms while not being aggressive on any product.

“Earlier, if a customer had banked with KVB for two to three months he could get a home loan. But now we are giving home loans to people who have banked with us for a minimum of one year and only if we are convinced about the person’s integrity.”

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