Major Public Sector Banks Collaborate to Establish a Single Small Loan Recovery firm

 Banks in the public sector are making a lot of effort to recover problematic loans. The performance and balance sheet of banks are adversely affected by these problematic loans. Public sector banks are currently planning to establish a single company for loan recovery. The State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda, and five other significant public sector banks (PSBs) in India are joining together to establish a pooled collecting agency. 

 Recovering retail and MSME (Micro, Small, and Medium Enterprises) loans under Rs 5 crore would be the primary emphasis of this new company. This partnership aims to streamline and increase the efficiency of the smaller loan recovery procedure. Banks will work together under a single agency rather than handling loan recovery independently.

style="font-family: arial;">For loans made to people and small enterprises, this will lower expenses and increase recovery rates. PSB Alliance Pvt Ltd, a business established by several banks to collaborate on projects, is managing the project. Sources with knowledge of the strategy said PSB Alliance will first develop a "proof of concept." In order to assess how this shared collection firm will function and how it can best handle loan recovery, they will create a working model or pilot.

Once the initial phase is successful, more public sector banks are expected to join the effort and become part of this unified loan recovery system. This collaborative approach aims to help banks better manage their loan portfolios, especially for smaller loans, which can be challenging to recover individually.