Chocolates for defaulters! SBI introduces unique method to ensure timely loan repayment

In a bid  to boost timely repayments, particularly among its retail borrowers, the State Bank of India (SBI) is introducing a novel strategy: greeting those at risk of defaulting on monthly instalments with a pack of chocolates, news agency PTI reported. Ashwini Kumar Tewari, the managing director in-charge of risk, compliance, and stressed assets at SBI, said, “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.”

Tewari said the unique method of offering chocolates and conducting surprise home visits was adopted because borrowers planning to default tend to ignore reminder calls. The personal touch of home visits has yielded remarkable success rates so far.SBI's retail loan portfolio expanded by an impressive 16.46% to reach ₹12,04,279 crore in the June 2023 quarter, up from ₹10,34,111 crore in the same period the previous year. This makes retail loans the largest asset class for the bank, which has a total book of ₹33,03,731 crore, growing at 13.9% year-on-year.Interestingly, the entire banking system has experienced double-digit loan growth of around 16%, driven primarily by retail loans.