The nation's largest lender State Bank of India is adopting a novel way to ensure timely repayments, especially by its retail borrowers, by greeting those likely to default on monthly installments with a pack of chocolates.

According to the bank, it has been found that a borrower who is planning to default will not answer a reminder call from the bank. So the best way is to meet them at their homes unannounced.

The move, aimed at ensuring better collections, comes amidst rising level of retail lending in the system coupled with increasing delinquency levels on the back of the upward movement in the interest rates.

SBI's retail loan book grew over 16.46 per cent to Rs 12,04,279 crore in the June 2023 quarter from Rs 10,34,111 crore in the year-ago period, making it the largest asset class for the lender whose total book stood at Rs 33,03,731 crore, growing at 13.9 per cent on-year.

In fact for the entire system, the double-digit loan growth of around 16 per cent has been led by retail loans only.

"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 here over the weekend.

According to Tewari, this novel method of carrying a pack of chocolates and personally visiting them is adopted because it has been found that a borrower who is planning to default will not answer a reminder call from the bank. So the best way is to meet them at their own homes unannounced and surprise them. And so far, the success rate has been overwhelming, he said.

Tewari refused to name the fintechs saying the move is just at the pilot stage and has been put into place just about 15 days back and "if successful, we will formally announce it".

"We are also talking to a few other fintechs to improve our collection efficiencies and hopefully by the end of the year, we will have formally tied up with at least half of them," he said, adding, "we want to continue the pilot for at least four to five months." SBI's over Rs 12 lakh crore of retail book consists of personal, auto, home and education loans. With a home loan book of over Rs 6.3 lakh crore as of June, SBI is the largest mortgage lender too.

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