Branch-level officials of state-run banks are under enormous pressure from seniors to boost loan growth, following a government diktat at a time when demand for credit, particularly from quality borrowers, has all but disappeared. Many state-run banks have put a stop to loans for borrowers with doubtful repayment capacity, but pressure from top executives to boost disbursals have put bank branch officials in an unenviable position, two people aware of the matter said.
Pressure to disburse loans to help companies tide over the situation caused by Covid-19 has been building for a while and has escalated after banks received a notification from the department of financial services on April 16 specifying deadlines for disbursals and guidelines on reaching out to borrowers. Mint has reviewed the notification’s copy.
“The senior management is seeking reports from zonal managers, who are pressuring branch managers without understanding field-level constraints,” said one of the persons. Most people seeking emergency credit have not been repaying regularly and giving them loans would be difficult, this person said.
