NPAs, Non-Performing Assets, fintech, bad debts, debt collection, debt recovery

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This SaaS-based collections platform is helping financial institutions, banks, NBFCs, and digital lending firms improve the efficiency of their collection using technology, automation intelligence, and optimal legal routes to expedite the recovery of bad debts, and ultimately controlling the rise of Non-Performing Assets (NPAs) in a pandemic ridden economy.

One of the fall outs of the pandemic has been increase in NPAs in India. The NPA ratio in India is among the highest compared to other countries and according to a report by Care Ratings, it is projected to touch 11-11.5% by the end of FY 2020-21.


Read more: ´Importers are just as important for Indian GDP as exporters´: Covid-19´s Impact on Indian Trade Finance


In 2018, NPA in India was at about INR 10 lakh crore. It kept on increasing for the last five-six years at the CAGR of almost 18-19%. Today, various channels through which collections happen has reduced from 22% to about 15%.

But then now, with digital lending on the growth path, the number of people with unsecure loans are on the rise. This has led to a reduction on net collections and recoveries, and in turn, has impacted the entire lending market.

Credgenics, a Delhi-based fintech startup calls itself India’s first of its kind debt resolution platform. The Tech Panda spoke to Co-founder and CTO Anand Agrawal as well as Co-founder and COO, Mayank Khera, to understand how they use AI, ML, and data science to disrupt the collections industry.

Anand Agrawal

Our platform is an automation first and cost-effective collections platform, which a lender can use to bring in their entire collections, entire recovery processes, in-house

Agrawal explains that Indian lending companies and banks are still using traditional ways of debt collection, which is communicating through telephones, emails, and XLsheets.

“The entire collection and recovery process is completely manual till date and they are not efficient enough to handle the bulk, which is increasing because of the NPA rise,” he says.

The pandemic has aggravated this problem further, increasing the load on banks.

“Especially because of COVID, the entire default in the market has doubled and tripled. Also, for the banks to handle that bulk, they will require more and more human resources. And that is where technology can help,” he adds.

Mayank Khera

It´s about counselling or just trying to communicate the case of the borrower to the lender

The Credgenics Platform

Credgenics offers a SaaS platform with different modules that assist NBFCs, banks, and lending firms in recovering their bad loans via a blend of legal strategies and technology solutions.

 

“Our platform is an automation first and cost-effective collections platform, which a lender can use to bring in their entire collections, entire recovery processes, in-house,” Agrawal explains.

Lenders can eliminate most of the redundant processes using the platform´s automation technologies and its data driven approaches. Also, they can manage delinquent loan accounts on the platform by communicating to the borrowers through different channels.

SaaS with AI ML and Data Science

The SaaS part of the platform employs technologies like AI, ML, and data science to make things easier. Their ML model predicts how likely the recovery of a particular loan account is by training it on parameters such as the geographical location of the loan, the type of customers responding to different calls, their age group and gender. Using these parameters, the model can predict whether the percentage of recovery for a loan account is low (20%) or high (80%).

“For the lender, it becomes easy to focus or prioritize the loan account with higher recovery chances, because they are able to recover the money easily from such customers, as they just require a push in that direction. The time involved in recovery would be on the lesser side and the net output with less cost would be on the greater side,” Agrawal explains.

While they were doing the same collection job with the same objective of recovering the money from the borrower, there was an information asymmetry between these two teams

Traditionally, banks would have collection and legal teams, who would send notices and letters. However, there was no communication between these different teams.

“While they were doing the same collection job with the same objective of recovering the money from the borrower, there was an information asymmetry between these two teams,” he says.

The Credgenics platform bring all the different modules in one single place, where the different teams can communicate the different information.

“The collaboration improves and the flow of information, such as the field executive has visited the house, is visible to the legal person who might be sending a legal notice. If a legal notice is issued to the borrower, it will be visible to the collections people as well,” he explains.

The entire platform is completely data driven, which can recommend the right approaches for solving a problem as well as provide information such as the number of times a borrower has interacted with an email or a legal notice.

Such data insights are taken as input in their ML model to predict how likely a person is to be able to pay that amount or not. In fact, the voice conversation between the borrower and the agent is taken into account for sentiment analysis.

The Legal Module with Mediation Services

The startup also has a legal module embedded for later stages of recovery, when legal notices are getting sent to the end borrowers and cases are getting filed. Lenders can automatically draft on the platform and send legal notices through multiple communication channels.

“That is the primary focus, to offer this as a platform to enable any lending firm to have all those collections technology driven, more of automation first,” says Agrawal.

The platform offers mediation services through 2200 lawyers and certified neutrals that they have paneled across India to help educate borrowers.

As a neutral, they are just facilitating the settlement between both the parties. It´s an amicable settlement with the consent of both the parties that takes place, so that there is no litigation in future

“We want to spread awareness in borrowers about how not paying a due amount and delinquency caused by unpaid loan accounts, would affect their credit score and their long-term financial health, and they will not be able to take a loan in the future,” says Agrawal.

Through mediation, their empaneled mediators or neutrals try to settle the dispute between the parties, says Khera.

“As a neutral, they are just facilitating the settlement between both the parties. It´s an amicable settlement with the consent of both the parties that takes place, so that there is no litigation in future,” he explains.

Traditionally, BPOs were employed to call borrowers for collections with approaches that weren’t that efficient. Credgenics makes these calls under legal supervision so that borrowers are well aware of the repercussions if a legal case gets filed against them by the lender.

“It´s about counselling or just trying to communicate the case of the borrower to the lender that includes information like the situation of the borrower, whether he wants to settle or not, etc. It’s just a kind of settlement between the parties through a neutral process,” says Khera.

Growth Story

A two-year-old startup, Credgenics started with a few clients with simple solutions. Currently, they are working with 32 clients, which include NBFCs (Puran, MoneyTap), fintechs, and microfinancing companies. They are also working with five private banks, including ICICI, HDFC, Axis bank, and Kotak, and one PSU.


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In 2019, they secured a seed fund from Titan Capital, led by Snapdeal founders, Rohit Bansal and Kunal Bahl. Demand surged during the pandemic, with a rise in defaults on account of job losses, pushing up NPAs and delinquency accounts.

They got a pre series B round back in June 2020 of US$ 3.5 million from Accel and DMI Finance, as well as a couple of angels, including Nitin Gupta, ex-Founder of PayU, Kunal Shah, Founder of CRED, Sumit Maniyar, Founder of Rupeek, Dilip Khandelwal, MD of Deutsche Bank, Kartik Bhat from Ubiquity Capital, and Ramakanth Sharma, Co-founder of Livspace.

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