UCO Bank withdraws Munnabhai-style decision to send sweets to defaulters after staff objections

UCO Bank withdrew its directive asking its officials to distribute sweets to top-10 non-performing account holders on Thursday.

UCO bank had sought its officials to distribute sweets to the non-performing borrowers on the ocassuin id as the bank believes that there must not be any undue harassment in the recovery process, reported The Economic Times.

"In some cases, it has been observed that clashes of ego between the customer and bank officials lead to the account turning into an NPA," the bank said in its circular issued this month.

UCO bank's initiative is similar to popular Lage Raho Munna Bhai movie's Gandhigiri (non-violent) technique. In the film, the protaganist Munna Bhai (Sanjay Dutt) used to send flowers with 'get well soon' greeting cards to the antangonist Lucky Singh (Boman Irani) to not use criminals to take over the senior citizens' retirement home property.

However, the notice issued by the zonal heads on Thursday (November 2) called for the withdrawal of the initiative after employees of the branch protested saying that it was "unfair" to expect the staff to behave cordially as each time an account became an NPA, it creates a lot of hassle.

UCO Bank was not the first such bank to try and resort to kinder means of recovery.

The State Bank of India also partnered with two fintechs earlier this year to come up with their ‘chocolate strategy’. The representatives from these fintechs will take chocolates to the borrowers who are likely to default when they go to visit and remind them of their upcoming installment. 

This comes after Finance Minister Nirmala Sitharaman, earlier this year, asked for the loan recovery process to be pursued with sensitivity. 

Moreover, last month the Reserve Bank of India had proposed new norms restricting recovery agents from calling borrowers between 7 pm to 8 am. 

"Banks cannot only rely on old traditional methods like sending recovery notices or publishing names. We need to connect with the customers. At times, distress could arise from extraneous reasons, and the bank can help the borrowers get back on track," a senior executive with PNB told the publication. 

In 2017, PNB had launched ‘Mission Gandhigiri’ wherein their team would visit the borrowers in their office or residence and sit there silently in an attempt to embarrass them. However, they have now discontinued the scheme and only reach out to borrows if they see stress in their account.

As the RBI is becoming stern on its stand on not using any kind of intimidation or harassment by recovery agents while collecting debt.