Odisha Grameen Bank Faces Allegations of Irregular NPA ‘Conversion’ Practices and Staff Pressure
Odisha Grameen Bank is under scrutiny over allegations of irregular Non-Performing Asset (NPA) “conversion” practices. Staff claim excessive recovery pressure and misuse of KCC loans to mask overdue accounts.
Author: Anonymous Banker
Published: 4 hours ago
Odisha Grameen Bank (OGB) is facing allegations regarding the use of irregular techniques to show improved recovery of non-performing assets (NPAs). According to staff, these practices, combined with high recovery targets, are creating concerns for employees, borrowers and overall rural lending operations.
Allegations and Practices
Branch staff report aggressive pressure from higher authorities to achieve steep NPA recovery targets, sometimes reaching ₹50 lakh per branch in a month. The central allegation concerns a practice described internally as “conversion”, where branch managers are allegedly compelled to sanction fresh Kisan Credit Card (KCC) loans in the names of family members of existing NPA borrowers and then route these funds to close old NPA accounts.
This effectively replaces old overdue accounts with new exposures within the same economic family, resembling “evergreening of loans”, which the Reserve Bank of India (RBI) has repeatedly warned against.
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RBI’s prudential framework requires timely and transparent NPA classification and flags evergreening—granting fresh loans to service old overdue accounts—as a serious regulatory concern. KCC master circulars state that KCC loans must be genuine agricultural credit to eligible farmers and not used to mask existing defaults. RBI has already imposed a monetary penalty on Odisha Grameen Bank for deficiencies in NPA classification and related prudential norms.
Staff allege that regional offices continue to encourage “conversion” during review meetings as a quick tool to reduce reported NPAs. They claim this focus on headline numbers undermines sustainable and legally sound recovery practices and affects the compliance culture expected in regional rural banks.
Employees also state that unions are yet to raise concern on the issue.
Impact on Staff, Borrowers and Recovery Frameworks
Staff express concern that while management may see short-term benefits through improved NPA ratios, favourable appraisals and promotions, the medium-term risk remains when newly sanctioned KCC accounts slip into NPA due to lack of repayment capacity.
Employees fear that responsibility will then shift to branch managers who sanctioned the loans “under pressure”, exposing them to disciplinary action and affecting genuine lending decisions.
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Employees also contrast this with public sector banks, which frequently rely on structured recovery tools such as one-time settlements, Lok Adalat and compromise schemes. RRBs like Odisha Grameen Bank are accused of leaning on internal conversion-type methods instead. Staff allege pressure to close NPA accounts at 40–60 percent or even 100 percent by loading fresh KCC liabilities on borrowers’ families, keeping headline recovery figures clean while shifting risk forward.
The practice raises questions regarding RBI guidelines on classification, fair lending and responsible banking. Employee associations in RRBs have already been flagging issues of target pressure and coercive instructions. For rural borrowers and families, repeated cycles of evergreen KCC loans may deepen indebtedness instead of providing sustainable credit access.
The allegations surrounding Odisha Grameen Bank’s NPA conversion practice reflect concerns about staff pressure, regulatory compliance and borrower burden. Employees highlight the need for transparent and sustainable recovery approaches within rural banking operations.
[Disclaimer - This article is written by a banker on condition of anonymity. The views represented here are of the author's and not the publication's official editorial stance.]
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