Banks use 'negative list' gambit to make defaulters pay up

To recover dues, bankers are trying to put the fear of God into obstinate defaulters to pay up. And how? By making it plain that they could get reported to the Credit Information Bureau, banks have been able to achieve a modicum of success in recoveries. Some defaulting borrowers do see the writing on the wall when they are sensitised about the deleterious consequences of finding their names on the bureau's negative list, say bankers. By delivering the simple key message that the doors of the banks will be shut for the defaulters once they are on the negative list, banks are gradually making headway in recoveries. The prospect of future banking relationship getting jeopardised convince some defaulters to repay loans.
According to the Credit Information Companies (Regulation)Act 2005, every credit institution has to become member of at least one credit information company. Credit institutions, including banks and housing finance companies, have to provide credit data (positive as well as negative) to the credit information company. By tapping into a credit information bureau, credit grantors get complete picture of the payment history of a borrower.(BL 22.11.2010)