Banks turn to pvt. detectives to tackle defaulters

The emphasis has increased after the Vijay Mallya case in Supreme Court: official

: Banks on the trail of loan defaulters is common knowledge. But what could give sleepless nights to defaulters who continue to lead an ostentatious lifestyle are banks roping in private detectives and investigation agencies.

Taking assistance of sleuths is a practice that has largely remained under cover. It is unlikely to remain so as pressure mounts on banks to address non-performing assets (NPAs), particularly with the spotlight turned on some high profile debtors.

Bank of India is one bank that is empanelling private detectives/investigation agencies. In its call for applications, the bank describes the task as one to “unearth the uncharged assets of the NPA borrowers”.

Apart from locating the missing/absconding defaulter, the detectives need to ascertain their occupation, income streams; find out their legal heirs and assets, source of income and modes of expenses, way of life style; and identify properties alienated/transferred by to family members/others during the tenure of the loan.

A BOI official says while banks have been turning to private investigation agencies for sometime, now the emphasis has increased after the Vijay Mallya case in Supreme Court. A consortium of banks are trying to recover around Rs.9,000 crore from the founder of Kingfisher Airlines.

Overall stressed assets

Overall stressed assets, a combination of gross NPA, restructured standard assets and written off accounts, are a major concern in the banking industry.

RBI Deputy Governor S.S.Mundra had told a conclave last month in Mumbai that stressed assets for the banking system moved up from 9.8 per cent in March 2012 to 14.5 per cent by December 2015.

During the same period, the stressed assets of public sector banks soared from 11 per cent to 17.7 per cent. On why private agencies, sources in Andhra Bank say there is not much police can do in loan defaults as they are civil cases. Moreover, it requires considerable focus and time to track various details. Thus, it is not just BOI as many other banks too take help of private detectives.

Not new this

Sharp Detective (P) Ltd founder D.K.Giri says banks have been engaging private investigation agencies for over three decades now. Working with banks, he adds, is not remunerative. Banks cite lack of approvals from their Boards to clear some of the bills.

While explaining that remuneration is as per the agreed terms, an official of SBI says for the banks it pays to engage sleuths.