Bank Repairment Scenarios

4.4 Research Objective 2: To identify if banks are flexible with regards to loan repayment based on 3 job hopping scenarios.
The purpose of this section is to identify if the banks are lenient according to the customer’s financial backgrounds. Therefore, job hopping of a customer is considered in three different scenarios.
Scenario 1: Bank customers jumping to a new employer who pays more than the present job. This means, that the customer is more likely to pay the loan amount in advance that allows the bank customer to reduce the interest amount paid to the bank.
Scenario 2: Bank customers jumping to a new employer who pays them less than the present job. This means that the customer will have to either find an alternative to pay back the

Source: Compiled by author from survey results
4.4.2.1 Additional charges
Majority of the banks do not apply extra charges in this scenario. From the survey results, 17 out of 20 responses from the banks (85 per cent) support this statement. There were only 2 banks out of 20 (10 per cent) who mentioned that there will be additional charges in case of scenario 2.
Fig 4.7: Is there any additional charges in this scenario? Source: Compiled by author from survey results
4.4.2.2 Is Scenario 2 profitable for the bank?
The response from 20 banks shows that the second scenario is not profitable for the bank. 75% of the response supports this statement. Among 20 responses, there were 15 responses in favor of the same. However, there was a 25% response from the banks that indicated that when the customer leaves an employee to receive lower wages, it becomes profitable for the bank with respect to the loan he has applied for.
Fig 4.8: Is Scenario 2 profitable for the bank?

Source: Compiled by author from survey

In these cases, the banks have two methods to help the customer pay back the loan. In certain cases, the customers will be asked to enter a daily payable or recurring deposit scheme. This is done by either taking up another loan, or joining “chitty” or other recurring deposit schemes. Self employment is another option, as there are various schemes available and will also make the customer eligible for self employment loan schemes. If the customer is receiving termination/separation benefits from the previous employer, the bank will also have the option to liquidate the loan through those benefits.
In extreme cases, when the bank finds out that the customer is unable to pay back the loan by any means, the bank will decide to go for settlement as per the bank settlement policies. The decision is usually put forward after mutual discussions with the customer.
4.4.4 In Scenarios 1, 2 and 3 which is more profitable for the bank?
The bank managers were asked in the survey to choose the most profitable scenarios among the three, and 95% of the responses were in favor of Scenario 1 where the bank customer is jumping to a new employer that provides higher wages. There was only 1 bank (5 per cent) that responded that scenario 2, was more profitable.
Fig 4.9: In scenarios 1, 2 & 3, which is more