Banks operating in Punjab today objected to the state administration's direction asking them to make an advance payment of 2 per cent of the total dues to be recovered from defaulters.

The matter came to light when a few bank representatives at the 111th state-level bankers committee meeting pointed out that the administration in several districts have been demanding a 2 per cent advance payment of the (of total banks dues) as recovery charges from banks for making reclaim their outstanding amount against loan defaulters.

Under the banks recovery incentive scheme (BRIS), banks pay 5 per cent of their total dues as recovery charges to state authorities for helping them recover their dues. "But now they are demanding 2 per cent in advance (out of 5 per cent) which is quite unjustified," a senior official of the Punjab National Bank pointed out. He also wondered, "if the state authorities fail to recover the dues then what will be the fate of the advance payment?"

District administrations make outstanding recovery of bank dues from defaulters under the State Recovery Acts and banks generally seek help of the state if the defaulters are farmers or beneficiaries of various government schemes.

A present, there 1,834 pending recovery cases in Punjab involving dues of Rs. 19.23 crore. Out of this, 1,637 cases have been pending for over one year.