Loan Recovery Policy Of SIDBI

Preamble

The Loan Recovery Policy (LRP) of the Bank is a non-statutory policy document issued by SIDBI on a voluntary basis.

Applicability

The LRP applies to all the SIDBI assisted accounts.

Objective

The basic objective of the LRP is to maximise recovery of dues under the credit portfolio of the Bank, out of Non Performing Assets (NPAs). The other allied objectives include time bound action for recovery, bringing about uniformity in approach while dealing with defaulting borrowers and to ensure that all the NPAs are duly attended to by proper application of appropriate recovery tool.

Guiding Principles of LRP

Dignity and respect of the customers is of paramount importance to SIDBI. SIDBI believes in following customer satisfaction and enduring customer relationship. SIDBI realises that quick and efficient credit delivery is the first step towards ensuring good recovery and endeavours to minimise undue delays in documentation and disbursements as far as possible. Greater focus is laid on preventing an account from becoming NPA rather than applying remedial measures at the post-NPA stage. The basic approach for recovery is practical, non prejuidiced and result oriented. Fair treatment and persuasion are corner stones of recovery mechanism. Legal action is considered only as the last resort. While specific recovery action in each case would depend upon the characteristics of the case and attendant circumstances, general consistency in approach is expected to be maintained while dealing with the defaulting borrowers. More considerate treatment would be meted out to the borrowers who continue to make payments even after being classified as NPA. All interactions with borrowers would normally be at the borrowers' location or at the SIDBI's office at convenient timings, to the extent possible, during the working hours of the Bank. Since timely restructuring helps in preventing further deterioration of the account, a decision on the restructuring proposal is endeavoured to be taken preferably within 1 month of receipt of the proposal with complete information. In respect of restructuring proposals, the package is generally finalised in consultation with other lenders. Cases eligible for coverage under the Corporate Debt Restructuring (CDR) System are intended to be referred to the CDR Cell. In the NPA cases where the borrower unit / company may be facing long term problems with structural deficiencies and may not be able to operate on sustained profitable lines, including non-viable sick / closed units, One Time Settlement (OTS) option is explored as an exit route. In case of units in operation, but not found to be in a position to generate adequate surplus to service the debt on a long term basis even after examining the possibility of restructuring, OTS option would be considered on merits. Reasonable notice would be given to borrowers before takeover of security. In respect of assets taken over, wherever there is a possibility of restructuring or compromise settlement of dues exist in view of factors like seriousness evinced by the borrower to clear the dues, desirability of putting productive assets into proper use, etc., handing back the possession of the unit to the borrower would be considered under a trusteeship arrangement, pending receipt of OTS payment / implementation of the package approved. In case of disputes, support and cooperation are extended by the Bank to resolve the difficulties as regards settlement of dues in a mutually acceptable manner within the spirit of underlying contractual obligations of both parties. A Grievance Redressal Mechanism is in place at the Head Office to take a view on the representations made by the borrowers classified as wilful defaulters.

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