As the economy is slowly recovering from the COVID-induced crisis, banks and other financial institutions are pushing hard to realise their stressed assets. The move could trigger a fresh round of socio-economic crisis.
The State Bank of India (SBI) alone has put up over a 1,000 properties worth around ₹600 crore for auction by invoking the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) in the State. Around 20% of the creditors of the bank were heavily impacted by the COVID-19 crisis, sources said.
The creditors, whose properties will be auctioned on June 31, include a few Non-Resident Indians who had returned to the State following the pandemic and attempted to start ventures here. A few others creditors had lost jobs during the pandemic period, which impacted their repayment capacity, said V. B. Pratheesh, Assistant General Manager of the Stressed Assets Recovery Branch (SARB) of the SBI.
Moratorium
The banks had gone soft on such creditors considering the economic crisis. The directions of courts to put on hold loan recovery and the moratorium on loan recovery announced by the governments were also followed. A large number of properties were thus left out from the recovery process. The moratorium on loan repayment expired last year. Now, the banks have aggregated the loan defaulters and initiated the recovery process, he said.
The Ernakulam unit, which caters to the Ernakulam, Kottayam, Idukki, Alappuzha, Palakkad and Kottayam, has the most number of such cases. The second unit of the SARB, which looks after the Kannur, Kozhikode, Malappuram and Thrissur districts, have a few properties for sale, said an SBI official.
Around 500 properties in Thiruvananthapuram and Kollam districts will soon go under the hammer, said Nareshkumar, Assistant General Manager, SARB, Thiruvananthapuram. The Indian Overseas Bank too has come out with advertisements for the sale of a few immovable properties in the State.
Discounts offered
Farmers in Idukki and Wayanad, who are yet to recover from the economic crisis, are on warpath against recovery steps, said another banker. Several banks are offering discounts up to 60% for the customers through One Time Settlement schemes as a relief measure, he said.
S. Premkumar, the convener of the State Level Bankers’ Committee, Kerala, said banks had been going soft on its defaulters for four years since the 2018 floods. The 2019 floods and the outbreak of the pandemic had slowed down the recovery process.
Sign of improvement
Mostly, the properties linked to old loans where little or no payments are made are put up for auction. There is a general improvement in the economic situation and people are repaying the loans, said Mr. Premkumar, a general manager in Canara Bank.
