Sudipto Nag, President, Retail Portfolio Management Group at Axis Bank, began with the importance of understanding customer behavior to enhance collections.
A large part of customers aren’t defaulting, they have shown credit hungriness. Banks will be able to read it. Pre-delinquency management is very crucial. It’s about finding the right balance between in-house and outsourced activities.said Sudipto Nag
Speaking on the importance of maintaining customer relationships while ensuring timely payments, P R Seshadri, MD & CEO of South Indian Bank, commented, “It is the balance between maintaining customer relationships and getting paid. From a managerial standpoint, it can be more straightforward to enforce compliance and follow protocols strictly when the credit portfolios are performing poorly.” This balance is essential for sustaining long-term customer trust while managing the financial health of the bank.
Effective Underwriting and Collection Practices
Effective underwriting is a priority for successful collections.
Our endeavour should be to push the account so that the burden of collection efficiency will go down. Collection accounts should be with the banks, as collection proficiency is critical. Underwriting is where it starts, but once it slips out, efforts will be much more.Binod Kumar, ED, Punjab National Bank
Rajeeva, ED at Punjab and Sind Bank, added, “Post-underwriting, there are software that clearly outline phases. Early morning signals are very important, and rule-based engines can help in online settlements.”
Leveraging Technology and Data
The integration of technology and data analytics is transforming collection practices. Pankaj Sharma, Chief Strategy and Transformation Officer at Yes Bank, highlighted the role of automation saying, “Collection journey automation is crucial. Everything should be completely recorded, providing an omnichannel presence and incorporating inputs for writing the collection scorecard.”
Umesh Revankar, Executive Vice Chairman of Shriram Finance, also discussed the impact of digital transformation, “Over the last decade, digital modes have transformed collection practices. We cater to segments not served by traditional banks, and our own employees interact better with customers than outsourced collections.”
Data analytics and smart use of AI are vital, but outsourcing should be carefully managed, Revankar added.
Challenges
Theoretical concepts of lending and formal portfolio assessments are crucial, but anecdotal information often drives decision-making in collections. Translating this information into actionable insights remains a challenge.P R Seshadri , MD & CEO, South Indian Bank
Pankaj Sharma, Chief Strategy and Transformation Officer, Yes Bank talked about the importance of daily reporting and industry-wide awareness, “Daily reporting will be a significant transformational change. Creating awareness campaigns at the industry level is essential, as the cost of credit impacts the resultant cost of loans.”
Binod Kumar, ED at Punjab National Bank raised concerns about regulatory impacts, “We need to explore aggregation possibilities for lenders. Creating awareness about customer ratings at the industry level is vital.”
The bankers were speaking at the FIBAC Conference held in Mumbai on Friday.
