Public sector lender UCO Bank Ltd. withdrew a controversial circular calling for branch officials to distribute sweets to the top 10 non-performing account holders, two people with knowledge about the matter confirmed.
"It is hereby advised that the instructions contained in the aforesaid communication stands withdrawn," a notice issued to Zonal Heads on Thursday read. BQ Prime has reviewed a copy of the notice.
On Wednesday, the lender had asked all zonal heads to direct branch heads to personally meet and greet the top 10 NPAs on Diwali and distribute a sweet packet to them.
"Accordingly, all the zonal heads are advised to ensure strict compliance with the above direction," the notice on Wednesday read.
The decision to distribute sweets was taken by the top management, the notice read.
Branch-level employees strongly protested against such a decision, the first of the two people quoted above told BQ Prime. Each time an account becomes an NPA, the branch staff and its head are hassled for the slippage, this person said. It is really unfair to ask them to deal with them so cordially, he said.
In the quarter ended June 30, UCO Bank's gross NPA ratio stood at 4.48%, down 30 basis points sequentially. During the quarter, the bank reported slippages worth Rs 536 crore, which included Rs 89 crore worth retail bad loans, 91 crore worth agriculture bad loans, and Rs 260 crore worth MSME slippages.
This is not the first time a bank has tried a cordial strategy for NPA recovery. In September, BQ Prime reported that the State Bank of India had appointed two fintechs to work on a similar strategy. The fintechs, who became the bank's representatives, would visit the homes of defaulters with a box of chocolates. They would then explain to the borrower why an NPA tag would be detrimental to their future borrowing plans.
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