Page 40 - A Banker Down the Rabbit Hole

the address etc. to detect such double financing. Still I had a solace that
I could detect it within a few weeks.

I disclosed this to my Branch Head. He went through all the papers of
old and the new loan. He called the borrower to meet us. He told the
borrower, "You have committed a fraud with the bank by not disclosing
earlier default while giving an undertaking that you do not owe any other
loan to the bank betraying our trust on you. You must close both the
accounts within a week."

After that we called the guarantor for the current loan. We told him about
the incident and charged him of his complicity in committing this fraud.
We warned him that if both the accounts are not liquidated in a week,
bank would be forced to lodge FIR against the borrower and the
guarantor. He pleaded innocence but we told him, "The police will decide
whether you were a party to the fraud or not. You must be knowing how
police investigates the frauds. Moreover, the new loan is to be recalled
by the bank and if the borrower does not repay, you as a guarantor have
to pay otherwise face a civil suit also. We would recover from you as you
have assets like your own house."

This approach of pressure on the guarantor who in turn put pressure on
the borrower, worked. The next day, they came to repay the old loan.
They requested us to continue with agreed repayment schedule for the
new loan. We told them that the defaulted borrowers could not be
allowed this but on their repeated insistence, we allowed them to repay
in six months' time instead of 36 months. Fortunately, they paid as per
revised schedule.

Insights from the episode

1. This was a good strategy to handle such borrowers.
2. Smarter tactics need to be devised to handle people acting smart.
3. I successfully used it myself when I became the Branch Head a few
years later as narrated in a separate episode.
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