In a unique initiative to ensure timely loan repayments, the State Bank of India (SBI) is taking an unconventional approach by surprising borrowers at risk of defaulting on their monthly installments with thoughtful gift of chocolates.

Share Market Live

NSE

Recognising that borrowers planning to default often ignore reminder calls from the bank, the nation's largest lender has decided to proactively visit these borrowers unannounced at their homes.

This novel approach is aimed at improving loan recovery rates, especially as retail lending in the financial system continues to rise, coupled with an increase in delinquency levels due to rising interest rates.

SBI's retail loan portfolio witnessed remarkable growth, surging by over 16.46 percent to reach Rs 12,04,279 crore in the June 2023 quarter, up from Rs 10,34,111 crore in the same period the previous year.

Also Read: Mastercard India appoints former SBI chief Rajnish Kumar as chairman

This surge has made retail loans the largest asset class for the bank, which manages a total book of Rs 33,03,731 crore, growing at a rate of 13.9 percent year-on-year.

"With two fintechs which 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," Ashwini Kumar Tewari, managing director in-charge of risk, compliance and stressed assets at SBI, said.

Also Read: Green funding: SBI plans to bundle home loans with rooftop solar installations