Collections Dossier: June 2024

RBI - Framework for self-regulatory organization(s) in the fintech sector

Technological innovations are revolutionizing the financial services landscape, with FinTechs emerging as both disruptors and enablers. These diverse entities are pivotal in redefining financial services by saving time, enhancing access, and reducing costs. However, their rapid advancements have raised concerns about customer protection, data privacy, and cybersecurity.

Establishing a Self-Regulatory Organization (SRO) can address these issues by setting industry standards and promoting ethical conduct, enabling FinTechs to innovate responsibly. Recognized by the Reserve Bank of India (RBI), an SRO would guide the sector with clear rules, governance standards, and dispute resolution mechanisms, ensuring sustainable and inclusive growth.

Read the RBI report for a deeper understanding of the need for a balanced, adaptive, and nuanced framework for Self-Regulatory Organizations in the FinTech sector.

A generative AI reset: Rewiring to turn potential into value in 2024

In 2024, the focus is on proving the value of generative AI (gen AI), calling for a strategic reset in companies' approaches. Despite the initial hype in 2023, challenges now confront businesses in fully leveraging gen AI's potential. Success hinges on developing robust organizational and technological capabilities, fostering broad innovation, deployment, and scalable improvements.

Read this report by McKinsey, which stresses that effective gen AI implementation transcends mere pilot launches, necessitating profound shifts in operational paradigms. This entails forming interdisciplinary teams, enhancing workforce skills, adopting suitable technologies, and ensuring data preparedness. Upskilling talent, establishing centralized standards for growth, and optimizing tech infrastructure is vital for efficient scalability and connectivity.

Building Trust through Governance: The Backbone of Stressed Assets Reconstruction

The financial health of banks is significantly influenced by credit risk, which constitutes around 80% of their risk-weighted assets. Any disruption in the credit life cycle stages (sourcing, appraisal, disbursal, and repayment) can lead to stressed assets.

Read this keynote address by Shri M. Rajeshwar Rao, Deputy Governor of the Reserve Bank of India, at the ‘Governance in ARCs – Towards Effective Resolutions’ conference where he emphasized the pivotal role of governance in Asset Reconstruction Companies (ARCs). He highlighted the significance of credit risk management and the necessity for ARCs to have robust resources, transparent operations, and clear asset resolution mechanisms.

He also outlined the regulatory framework designed to ensure ARCs have adequate resources and transparency, including increased net-owned funds and enhanced disclosure requirements. He stressed the importance of sound governance, ethical conduct, and accountability in ARCs to build trust and ensure effective functioning.

Finally, he also called on ARCs to implement revised guidelines for board composition and governance, urging them to foster a strong institutional culture to effectively manage distressed assets and support the financial system's stability.

Election 2024 Results: Continuity or change? Corporate India speaks on the 2024 poll results

As the entire nation closely watched the outcome of the 2024 general elections, the focus now is on the new government to sustain the growth momentum of the economy, which outpaced other major global economies. A third term for the NDA government will ensure continuity in India’s socio-political and economic landscape, supporting the goal of increasing the country’s GDP from $3.5 trillion to $7 trillion by 2030.

Rishabh Goel , Co-founder and CEO of Credgenics, shared his expectations from the new Government with leading media organizations. The focus should continue on expanding the digital ecosystem and addressing challenges such as interoperability, policy frameworks, cybersecurity, financial literacy, and the digital divide. This will enable FinTechs to offer innovative financial solutions, promote financial inclusion, and accelerate the adoption of AI and ML.

He also expects policies that will ease doing business, support tech startups with sustained funding, and protect intellectual property, along with initiatives in sustainable infrastructure development, skill enhancement, and improved digital connectivity.

?? Read the full coverage .

Leveraging tech solutions: Transforming NPA management in retail loans for ARCs

Asset Reconstruction Companies (ARCs) play a crucial role in maintaining the financial health of the banking ecosystem. In this article for Express Computer, Rishabh Goel , Co-founder and CEO, Credgenics, shares his insights on the importance of digitizing debt resolution processes for ARCs, particularly those handling retail and SME debt portfolios.

He explains how embracing platforms equipped with AI, machine learning, and data analytics capabilities can streamline due diligence, enhance communication and transparency, and enable better strategic planning. These advancements improve efficiency, compliance, and profitability while enhancing collaboration within the financial ecosystem.

He further underscores the importance of investing in digital solutions to help ARCs thrive in a rapidly evolving lending landscape, as it contributes to sustainable growth and sector revitalization.

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From Data to Resolution: The impact of AI in pre-litigation loan disputes

AI tools are revolutionizing pre-litigation loan dispute resolution by enhancing efficiency and providing deep insights to legal professionals.

In a recent YourStory media article, Mayank Khera , Co-Founder & COO, Credgenics, highlights how AI algorithms swiftly analyze financial records and communication logs, streamlining evidence collection and analysis. These tools also aid in document review, due diligence, and identifying any discrepancies. Moreover, predictive analytics empower professionals to foresee case outcomes and strategize effectively, while AI systems retrieve relevant case law and precedents, strengthening legal arguments.

Additionally, he talks about AI tools facilitating increased access to justice by expediting routine matters and reducing court backlogs. Despite risks like bias and lack of transparency, AI’s benefits in dispute resolution are substantial, making it an indispensable tool in modern legal practices.

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Does a loan settlement arrangement ruin your CIBIL credit score? Check details

When settling loans, it is crucial to consider the impact on your credit score and financial future. Settlements are reported to credit bureaus, which can significantly lower your credit score and signal to future lenders that you are a high-risk borrower. However, each lender has its criteria for loan settlements, as there are no universal guidelines.

Read this article in Business Today, where Anand Agrawal l, Co-founder and CPTO, Credgenics, discusses how loan settlements affect credit scores and future loans. He recommends timely bill and EMI payments, maintaining a credit utilization ratio below 30%, avoiding multiple loan applications, checking credit reports for errors, and considering a small loan or secured credit card to rebuild credit history. He emphasizes that consistent financial discipline and timely repayments are crucial for long-term credit score improvement.

Unicorns of Tomorrow - Decoding India’s Soonicorn Landscape

As the Indian startup ecosystem continues to thrive, Credgenics stands out among the fintechs with its unique and innovative tech driven approach to debt resolution.

This accolade of being adjudged a Soonicorn in the Inc42 Media report, "Unicorns of Tomorrow - Decoding India’s Soonicorn Landscape " highlights the robust growth trajectory and underscores our commitment to power the digitization of the financial services sector in specific focus areas.

Our relentless pursuit of excellence has set new benchmarks for the industry, driving transformative change and solidifying our position as a leader in the fintech segment.

This recognition reaffirms our strategic vision and our continual efforts to push boundaries and deliver unparalleled value to our clients. It serves as a catalyst, propelling us further toward creating a more efficient and inclusive financial ecosystem.

Regulatory Insights into 2024

Technological advancements present vast potential for the financial sector, yet they also pose challenges like market concentration and heightened competition. As a regulator, the RBI strives to fortify the financial system by implementing suitable regulatory frameworks that bolster national growth while upholding financial stability.

In a special address by Shri M. Rajeshwar Rao, Deputy Governor of the Reserve Bank of India, he delves into how the RBI’s regulatory strategy is anchored in prudence, proportionality, and proactiveness. This ensures that regulations remain balanced, forward-thinking, and cohesive across diverse financial entities.

He further discusses the evolving regulatory focus, encompassing technology utilization, enhanced customer service, governance and compliance enhancements, fortified prudential regulations, and management of pro-cyclical lending risks.

The RBI’s initiatives encompass guidelines for digital lending, support for fintech innovation, and governance enhancements. Through a collaborative approach, the RBI aims to construct a robust and adaptable financial system that caters to the country's evolving requirements. Read more.

Credgenics - a leader in Online Dispute Resolution (ODR) for BFSI

The Indian financial services industry has seen exponential growth in the recent years. With its holistic digital transformation initiatives, it has been able to rapidly expand access to formal financial services and credit across the country.

Credgenics has supported this growth with its unique combination of advanced technology and industry expertise. Credgenics has firmly established its leadership position in financial dispute resolution through its versatile Online Dispute Resolution (ODR) platform.

Credgenics has emerged as India’s largest recognized ODR start-up by size, scale, volumes, and revenue, empowering individuals to navigate their financial disputes with transparency and inclusivity. Credgenics offers a comprehensive suite of solutions, including an arbitration platform, pre-litigation mediation / conciliation, and credit counselling capabilities.

Check out our media throwback highlighting the recent coverages.

The impact of Generative AI in banking sector

GenAI has transformed various aspects of banking operations, including customer interactions, product offerings, risk assessment, compliance tasks, accounting functions, and underwriting processes. Its integration holds the promise of boosting efficiency, effectiveness, and customer-centricity within banks.

However, this advancement also brings challenges such as security risks and the potential for misinterpretations generated by AI. Early adopters are encouraged to strategically harness GenAI to navigate the dynamic banking landscape and set new industry benchmarks.

Explore this blog, 'The impact of Generative AI in banking sector ', to gain insights into the progression of GenAI in tandem with technological advancements, the significance of Generative AI within the banking industry, the profound effects of Generative Artificial Intelligence (GenAI) on banking and various methods of deploying generative AI in banking operations.

Transforming field collector efficiency with CG Collect

Field teams involved in debt collections encounter numerous challenges that include inefficiently allocated borrower accounts, inability to access complete account details, language barriers, and patchy network connectivity. These obstacles can lead to missed collections, wasted time, and increased operational costs.

Sanju, a field collector, shares his experience using CG Collect mobile app for field collections.

Before CG Collect, my daily schedule was chaotic and it was difficult providing details to my supervisors. Planning routes was a nightmare, and language barriers made communication difficult. I had to use multiple apps. Now, with CG Collect, my routes are optimized, communication is seamless, updates are shared with managers easily and I can work offline without issues – all with one app.

With CG Collect, field collectors can enhance productivity through meticulous daily planning with complete transparency. The app empowers field teams with advanced features like route optimization, proximity-based allocations, Google Maps navigation with geo-fencing, and real-time receipt generation. The multilingual interface, covering over 22 Indian languages, makes it easy for field collectors to select their preferred language.

Watch this video where Sanju talks about making field collections simpler, faster, and more efficient with technology.

Contactability and Engagement Scores to enhance borrower outreach strategies

Effective borrower communication is essential for lenders to mitigate risk and optimize recovery. Credgenics' Collections Analytics now features Contactability and Engagement Scores to enhance borrower outreach strategies, providing lenders with critical insights into borrowers’ reachability and responsiveness.

These advanced metrics allow lenders to precisely evaluate borrowers' accessibility across multiple channels, gauge borrowers' level of engagement with outreach efforts, segment borrowers strategically based on contactability and engagement and tailor outreach strategies for maximum impact and interaction.

By leveraging these data-driven insights, lenders can optimize resource allocation, streamline communication efforts, and enhance the overall borrower experience. With Credgenics' Collections Analytics, lenders can significantly improve collection efficiency and reduce delinquency rates. Watch the video to know more.

Powering rural debt collections with digital enablement

A pioneering NBFC, providing credit, productivity, and savings solutions for underserved rural populations in India was facing manual reconciliation challenges, especially for cash-based debt repayments. It aimed to digitize its processes to streamline field collections.

Credgenics Billzy provided an advanced payment solution, enabling automated reconciliation and secure digital repayments. Key features included real-time loan mapping, pre-generated payment links, multiple payment modes (UPI, bank transfers, cash, cheques, QR codes), and advanced security measures. Monitoring and analysis included loan repayment tracking, daily settlements, automated reconciliation, and exception notifications.

As a result, the customer saw a 20% increase in digital payments, touched over 60,000 unique loan accounts, and achieved a 27% rise in total amount recovered digitally within three months. This led to centralized digital recording, streamlined reconciliations, and improved process efficiency.

?? To Explore More: Download the case study.

Customer Speaks

As a leading tech-enabled debt collections and resolution platform, Credgenics is at the forefront of the digital transformation wave that empowers lending companies worldwide to elevate their debt management strategies and sustain competitive advantage.

Rajesh R, Head of Collections, Fi, a leading money management platform, shares how the Credgenics platform makes debt management processes seamless, provides real-time visibility of activities, and is backed by a highly approachable support team that consistently exceeds their expectations to meet their business requirements.

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