India’s largest lender State Bank of India (SBI) will start making recovery calls from Friday as a serious step to prevent loans from sliding into non-performing assets (NPAs) amid the Covid-19 pandemic.

The structure put in place will resemble the recovery operations of a non-banking financial company (NBFC). Like in the case of NBFCs, calls will be made to customers reminding them about their outstanding dues. The state-owned bank, however, will not use strong-arm tactics to recover loans.

Named the pre-delinquency calls, these will be made from the call centres at different cities like Baroda, Chennai, Kolkata and Bengaluru. These outsourced call centres will have specially recruited teams to service SBI.

“We are starting these pre-delinquency calls so that the NPAs are under check and borrowers gear up to make their payments,” SBI deputy managing director of retail Saloni Narayan told Indianbankingnews.com.

The call centres already existed for answering SBI’s customer-related queries. For the recovery calls, these centres will provide the bank with additional staff specially recruited for this purpose.

The target customers will be for the loans where the payment is delayed by 7 days (SMA 0), by 30 days (SMA 1) and by 60 days (SMA 2).

SBI has Rs 7,977 crore of loans in the SMA 1 account and Rs 3,326 crore in the SMA 2 category, according to the figures released by the bank at the end of the first quarter ended 30 June 2021. The ticket size of the loans put under the pre-delinquency call list is above Rs 5 crore. The bank is targeting repayments from all strata of borrowers, excluding the large corporates.

“While SBI’s earnings were in line with our estimates, we are pleasantly surprised by its slippages, which have been lower than most peers. While most peers reported numbers well above 3%, SBI’s slippages at 2.8% was a good outcome in a tough quarter. Almost ~30% has already been recovered in July. Outstanding restructuring has also been normal and around ~1%, in line with peers,” Macquire Capital Securities analyst Suresh Ganapathy said in a report.

SBI’s asset quality outcomes have been braving the impact of the second wave of Covid-19. The fresh slippages of the bank stood at Rs 15,666 crore, but a significant amount of this has already been pulled back in July 2021. Slippages in the quarter ended June included Rs 5,268 crore of retail loans. In case of home loans, it stood at Rs 3,123 crore while the rest was spread across personal loans and car loans.

“The personal loan segment where we had extended credit to non-salaried was impacted, but it will be recovered as the economy opens up. On the home loan front, we have no worry at all as most of these are extended to the salaried government employees,” said Saloni.

The fresh SME slippage was high at Rs 6,416 crore while the agriculture slippages were at Rs 2,920 crore At the end of the June quarter, the bank had gross NPAs outstanding of Rs 1,34,259 crore.

The bank has restructured Rs 2,056 crore of loans under the Reserve Bank of India’s first restructuring exercise. In the second round, it has restructured Rs 5,246 crore of loans. The window for the special restructuring is open until 30 September 2021.

The retail slippages, led by the bank’s agriculture loans and micro and small enterprises, was at Rs 70,121 crore. Of this, agriculture constituted Rs 32,724 crore and SME Rs 26,203 crore.

The personal segment including home loans, car loans and personal loans stood at Rs 11,194 crore. In the personal category segment, the NPAs rose from the non-salaried people like doctors and chartered accountants, who got impacted due to the second wave of Covid-19. The upgrades and recoveries during the June quarter was Rs 4,969 crore.