Seemandhra stir: Banks' loan activity comes to a standstill

With the stamps and registration department observing bandh in protest against the state's bifurcation, the loan activity of several banks in Visakhapatnam has come to a standstill. These banks have not sanctioned new loans in the last 4-5 weeks, according to heads of various local banks.

For housing and mortgage loans, a customer needs to submit the EC (encumbrance certificate) for respective properties. But, due to the strike by the employees of the stamps and registration department, ECs are not being generated.

Andhra Bank, in normal times, gives on an average Rs 75 crore new advances every month in the Visakhapatnam zone. However, the agitations affected its loan business by more than 50 per cent during the last month, according to NV Rajendra Prasad, assistant general manger, Andhra Bank's Vizag zone.

“Any new loan other than gold and agriculture needs stamp papers, ECs and stamping from the registration department. The strike by the department is indirectly affecting our advances,” he added.

Recoveries too have fallen to some extent. “Most of the housing and personal loan customers have opted for monthly payment through salaries, but last month there were no salaries for government employees and we are not in a position to recover the installments till their accounts get credited with salary,” he said. All the major banks in this region were facing similar problem, Prasad added.

For some, even the transactions are getting affected. Narasimha Murthy, chief executive officer of Visakhapatnam Cooperative Bank, said gold mortgage loans were slightly affected, but the strike impact on other advances was more than 60 per cent at their branches.

“Owing to the agitations, business volumes have reduced drastically as daily cash remittance by business houses has fallen significantly,” he said, adding most of their customers belonged to middle-class and non-availability of transport was making it difficult for them to visits branches.