Banks to ‘name and shame’ guarantors too

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Saturday, July 20, 2013

Tightening the noose on loan defaulters, banks have decided to ‘name and shame’ the guarantors of such borrowers as well by publishing their photographs and other details in newspapers and on notice boards of bank branches and community centres.

Banks, mostly public sector lenders, began publishing pictures of wilful loan defaulters in newspapers and at other places around the areas of residence of such borrowers earlier this year to make them to pay up.

This exercise has now been extended to the guarantors of loan defaulters as well as part of the efforts to build pressure on the borrowers to clear their dues

Interestingly, public sector banks have taken a lead in adopting these measures and are already making public the photographs and other details of loan defaulters.

According to bankers, the photographs, names and addresses of the borrowers and guarantors would be published in newspapers if the dues are not cleared within 15 days of the notice containing particulars of the original borrowers.

Courts’ view

Recent High Court judgments have also strengthened the banks’ hands on naming and shaming of guarantors to recover their dues. Several high courts, including the Madras High Court, have held that banks can publish photographs of guarantors in newspaper advertisements, say legal experts.

With large banks adopting the strategy of publishing photographs to put pressure on defaulters, even mid-size and small banks are now looking to follow suit, said sources in the banking industry.

The RBI has authorised banks to go after both borrowers and guarantors of loans. In the eyes of law, both are to be treated on an equal footing.


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