Thanks to CIBIL's Locate Plus Scheme,
wayward customers cannot get away easily,
says finance expertR.P. Deshpande
One of the major worries for banks and other lending institutions has been the large-scale increase in defaults of unsecured loans and other personal loans, wherein the whereabouts of borrowers is untraced.
These wilful defaulters have availed themselves of the maximum credit available in their credit cards and other personal loans and fled the scene by shifting to other cities/towns or left the country.
Since such borrowers are untraceable the banks are unable to recover outstanding loans.
During 2000-2008, when the country was witnessing an economic boom, it was rather easy to migrate to a bigger city to find a job, lead a lavish life there for some months by taking all sorts of personal loans and hop to another city/leave the country without leaving any trace of new employment and new place of residence. Such loans were never paid back.
To trace such defaulters, the Credit Information Bureau (India) Limited (CIBIL), which has been assisting all lenders by sharing the credit information of borrowers of all member organisations (banks and other lending institutions), has come out with a product called ‘Locate Plus'.
CIBIL claims that ‘Locate Plus' will help member-banks and other lending institutions to enrich their customer contact information and enhance efficiency of the collection process. ‘Locate Plus' will provide the latest information such as customer's contact addresses (both residential and workplace), and contact numbers available in the CIBIL database.
Traced at last
Yogesh had migrated to Bangalore from Madhya Pradesh in 2002 and used to work for a leading software company. When he got a lucrative job in the U.S., he coolly withdrew the maximum from his credit cards and took a personal loan of Rs. 2 lakh and fled the scene without informing the lenders about his new domicile or employment.
He never paid back the loans and banks which had funded him could not trace him, till recently.
After 5-6 years in the U.S., he returned to India and found a job in Gurgaon. He applied for a credit facility in a bank in Gurgaon in 2009 but his application was rejected as the credit report issued by CIBIL showed that he had defaulted in three banks. The bank where Yogesh's loan application was rejected promptly gave the personal details of Yogesh to CIBIL.
The new contact details of Yogesh were promptly passed on to the three banks of Bangalore, which had funded him in 2002-03, when they approached CIBIL under “Locate Plus' scheme.
All three banks zeroed-in on him and recovered their long-pending bad debts along with interest, late payment fine and recovery charges.
Now, banks and other lending institutions can obtain contact details of such defaulters for a fee from CIBIL. It is a welcome move by CIBIL, as not only defaulters will be kept away from the financial system, but such defaulters will not be able to hide anywhere.
(The author is a Director of Institute of Home Finance and can be contacted at deshpanderp2007