How to monitor Irregular Clients

Monitoring of Irregular clients (more than one installment)

(              A)   Close monitoring and follow-up until the client becomes regular - 

i)                    Phone call by designated officer immediately after one installment becomes overdue

ii)                  Follow-up call should continue as per commitment of the client till due of the second installment.

iii)                If second installment is overdue second recovery reminder letter in positive language is to be issued. Telephone follow-up and visit should follow and intensified gradually.

iv)                If second overdue continues till due of 3^rd installment 3^rd reminder letter giving 15 days’ time should be issued with the due notice of 3^rd installment. Head of CAM shall visit and talk to owners of borrower company.

v)                  If 3^rd installment falls overdue, the client should be considered as defaulter.

-          4^th remainder latter is to be issued mentioning next course of action such as – loan call back, circulation of names of sponsors and company as defaulter and taking recourse of law if overdue position does not improve.

-          Visit by Head of CAM along with RM.

-          Call main sponsors to FIs office to pursue repayment

-          Inspect and check collateral

-          Call guarantor; if any

-          Issue notice to guarantor demanding repayment of loan

-          Issue notice to all directors separately

vi)                Overdue of 4^th installment

-          Issue “loan call back” notice and circulate the names of sponsors and their company to all banks and NBFIs as defaulter. If no repayment is received then issue legal notice.

-          Initiate litigation process as per Loan Recovery Act and Negotiable Instrument Act. Never allow clients to defaulter more than four installments. NBFL should go hardline initiate legal action and take all other lawful measures, such as to recover loan engage recovery agent visit sponsors’ home in group etc.

We shall standardize reminder letters (no.i, ii, iii), loan call back notice, notice to guarantor in order to simplify the process.

This is a generalize a guideline to follow in monitoring and recovery. At the same time monitoring and recovery officers should also keep in mind that recovery does not always follow any structured way. Actions may differ case to case basis and depending on type of sponsors. But steps to follow are more or less similar which are outlined above.