In a bold move designed to incentivize timely repayments from its retail borrowers, the State Bank of India (SBI) has introduced an innovative strategy : delivering a delightful surprise to individuals at risk of defaulting on their monthly loan instalments—a box of chocolates. According to a report from the news agency PTI, this unconventional approach has yielded remarkable results during home visits to borrowers.
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Ashwini Kumar Tewari, the Managing Director overseeing risk, compliance, and stressed assets at SBI, shed light on this distinctive strategy. He explained, “We are presently in the experimental phase of a novel method to remind our retail borrowers of their repayment responsibilities, with the collaboration of two fintech companies employing artificial intelligence.
One fintech engages in direct discussions with borrowers, while the other identifies potential default risks. For those borrowers deemed at risk, representatives from the second fintech conduct personal visits, bearing a box of chocolates as a friendly gesture, to remind them of their upcoming EMIs.”
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The decision to employ chocolates and conduct surprise home visits was driven by the observation that borrowers teetering on the brink of default often disregard reminder calls. The personal touch of a home visit has yielded exceptional success rates, as borrowers are more responsive to this approach.
As of the June 2023 quarter, SBI’s retail loan portfolio has experienced significant growth, expanding by an impressive 16.46% to reach ₹12,04,279 crore, up from ₹10,34,111 crore in the same period the previous year. Retail loans have now become the bank’s largest asset class, constituting a substantial portion of its total book value, which stands at ₹33,03,731 crore, growing steadily at a rate of 13.9% year-on-year.
It’s noteworthy that the entire banking sector has witnessed double-digit loan growth, primarily fueled by retail loans.
Although specific details regarding the fintech partners were not disclosed, Tewari indicated that this initiative is currently in the trial phase, having been launched just 15 days ago. He further stated, “We are also in discussions with several other fintech companies to enhance our collection efficiency. By year-end, we aspire to formalize partnerships with at least half of them.” He emphasized the bank’s commitment to continuing the pilot program for an additional four to five months.
SBI’s extensive retail portfolio, surpassing ₹12 lakh crore, encompasses a wide array of loans, including personal, auto, home, and education loans. With a home loan portfolio exceeding ₹6.3 lakh crore as of June, SBI retains its status as the country’s largest mortgage lender.
This innovative approach, blending technology and personalized interaction, underscores SBI’s dedication to promoting timely repayments while nurturing stronger bonds with its borrowers. With the sweet gesture of chocolates, SBI is advancing toward a more borrower-friendly banking experience.
(News Source and Credit PTI)