SBI and 4 Major Banks to Form New Company for Easy Loan Recovery
SBI and 4 Major Banks to Form New Company for Easy Loan Recovery
New company to focus on small loan recovery for retail and MSMEs; work expected to begin this financial year
In a major step to streamline banking services, five leading public sector banks, including the State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BoB), are planning to come together to launch a new company focused on recovering small loans.
The company will mainly deal with the recovery of retail and MSME loans below ₹5 crore, and will operate through PSB Alliance Pvt. Ltd.
Easier, More Efficient Recovery Process
The new initiative aims to make loan recovery simpler, faster, and more cost-effective. According to early information, only five banks will be involved initially, with more expected to join later.
The system will especially help in cases where customers have taken loans from multiple banks, by allowing a single point of recovery and better coordination.
Inspired by NARCL Model
Sources suggest the company will operate in a similar way to National Asset Reconstruction Company Ltd. (NARCL), but with a focus on smaller loans. This is the first time India will use such an advanced system for smaller debt recovery.
The move will also allow banks to concentrate on new business, while the new company handles overdue loans.
Work to Begin This Year
According to officials from PSB Alliance, work on the new company is expected to start within the current financial year. The Finance Ministry has also asked public banks to regularly review their top 20 stressed loans as part of tighter financial monitoring.
