Banks may cut credit on recovery discredit

NEW DELHI: Taking bankers to task on dubious loan recovery methods might just prove counter-productive, with some bankers considering a freeze on lending to segments that throw up maximum defaults.
Should the bankers be penalised for recovery, they would have to make a trade-off between discontinuing their services to some segments against bearing the risk of wilful defaulters who could misuse a legislation to their advantage. Banks factor in a certain minimum number of defaults despite stringent recovery procedures. They fear the defaults could go up in case recovery processes are not tight any more.