Before financial crisis taking personal loans from any bank was easy. But economic slowdown and increase in the NPA (non-performing asset) has forced banks to withdraw this segment of loan. However most of the banks has reserved it only for the salaried class customers those having accounts in the respective banks. Banks are not giving personal loans to the businessmen and self-employed professionals.
The reason banks give for stopping the personal loan is that the NPA in personal loan segment (personal loans, car loans, home loans) have doubled to around four per cent due to recession and large-scale retrenchments. In 2007 it was around 2%.
Conversing with the Tribune reporters, UCO Bank field general manager, Ripan Murgai said due to economic downturn the personal loan segment has been worst affected. He said, “As personal loan is an unsecured loan (where no collateral is required), a number of borrowers in Punjab and Haryana have become delinquent. The NPA level in housing and auto loans is also going up, but recovery here is better as house or car is a collateral security.”
He added, “In Haryana, the NPA in personal loan segment has gone up by over three per cent. Though the economic downturn is one of the main reasons for delinquency, the debt waiver announced for various sectors by the government has also created a bad credit culture, with people desisting from paying back their dues”.
In fear of losing their money banks initiated their stressed assets management cells. SBI country’s largest lender has added new recruitments in their recovery cell in order to speed up recoveries on personal loans, home loans and finance against immovable properties.
In addition to this many banks are working on restructuring their personal loan segments so at to certain that more accounts do not get offended.
