The State Bank of India , the country's biggest lender, will name and shame "wilful" defaulters and put their pictures in newspapers to get them to pay up, the Economic Times said on Saturday.
"The fresh approach will ruffle a few feathers," the paper quoted a bank executive as saying.
A "wilful defaulter" is one who does not meet payment obligations even when he or she has the funds.
Bad loans in India could jump to as much as 5.8% of the total within two years in a "severe risk" scenario, up from 2.8% in September, according to a central bank report.
The non-performing loan ratio for Indian banks was 2.3% in the last fiscal year.