Now NBFCs 'name and shame' guarantors for loan defaulters

They have begun publishing photographs of such borrowers and their guarantors in newspapers

Joining banks in naming and shaming wilful loan defaulters, non-banking finance companies (NBFCs) have also begun publishing photographs of such borrowers and their guarantors in newspapers.

 

Tata Capital Financial Services Ltd, an NBFC entity from salt-to-software conglomerate Tata group, today published pictures of two persons in connection with default in repayment schedule of Rs 15 crore loan granted to Jalandhar- based Sameet Motors Private Ltd.

 

These two persons -- Neil Chahal and Charanjit Kaur -- had provided personal guarantee to secure the loan. They were the directors of Sameet Motors Pvt Ltd.

 

"Subsequent to the availing of the said facility, the borrower (Sameet Motors) and the aforesaid guarantors have failed to adhere to the repayment schedule of the loan agreement and as such the account has become a non-performing asset," Tata Capital Financial Services said in a public announcement.

 

"These guarantors -- Neil Chahal and Charanjit Kaur -- as well as Sameet Motors have failed to repay in spite of written demand. In view of the default, Tata Capital Financial Services initiated various legal proceedings against them for recovery of money for realising our legitimate dues.

 

"Hence the public is hereby cautioned not to deal with the above mentioned collateral/security as well as with the said persons," the public announcement said.

 

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

 

As per RBI's regulations, wilful defaulters are mostly those who are found to be engaged in deliberate non-payment of dues despite adequate cash flow and good networth.

 

Banks can also classify the defaulters as 'wilful' if the loans are utilised for purposes other than those previously stated, funds are siphoned off from the bank-financed activity, records are falsified, securities are disposed off without bank's knowledge and the borrower indulges in fraudulent transactions.