Raising a din over loan default

By Sanjaya Jena
BBC News, Bhubaneswar

Bank employees hold posters shaming a defaulter

A bank in India has decided to publicly shame defaulters in order to recover outstanding loans.

Employees of the Urban Co-operative Bank in the eastern state of Orissa have begun staging noisy demonstrations outside the home of defaulters.

Armed with posters, they kicked off the loan recovery drive outside the homes of two defaulters last week.

Officials say this is the final resort for the bank which is facing problems over mounting bad loans.

"We intend to give the defaulters a red face," said the bank's president Niranjan Pradhan.

Before seeking to publicly embarrass the defaulters, the bank said it had exhausted all other options to recover the loans.

This is our last desperate attempt to recover money and mend our financial health Niranjan Pradhan, Bank official

These included including sending the defaulters countless reminders and notices to pay up.

Some 77% of the bank's loans have gone bad - this amounts to $6.13m of unrecovered money.

Public embarrassment

With the bank seeking to humiliate them, the defaulters have gone underground.

At one home in Kharavela Nagar neighbourhood, the residents locked themselves in while bank employees sat outside holding posters.

"Please pay up. The bank's money is not for swindling," said one poster.

The bank hopes the public embarrassment will force its defaulters to start paying up.

It has been encouraged by the recent success of another bank in Kalahandi district to recover loans. The bank staff played drums outside homes of some defaulters three months ago, resulting in a flurry of recovery.

Niranjan Pradhan hopes the same could be the case in Bhubaneswar.

"It is our last desperate attempt to recover money and mend our financial health," he said.

Earlier this year, authorities in the southern city of Rajahmundry in Andhra Pradesh state sent drummers around to create a noise outside homes until evaders cough up.

Officials say they recouped 200,000 rupees ($4,600) on the first day.

Harried residents emerged from their homes to be told by accompanying tax collectors to pay up or continue facing the music.