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Tech is collecting loans in India as global crisis looms

March 28, 2023

Tech is collecting loans in India as global crisis looms
A lender whose portfolio of unsecured retail loans is not increasing by 50% annually is simply not trying hard enough.

All kinds of bank and nonbank lenders are heaping credit on household balance sheets even though the consumer economy is fragile: A tiny minority that can afford luxury goods is in great financial shape, but low-income earners, especially outside large cities, are struggling with two-wheeler purchases and smartphone upgrades.

Lenders know they have to make the most of this uneven K-shaped recovery, especially if the current crisis in US banking snowballs into something sinister. While it’s all very well to double down on consumer credit and broaden it out to subprime borrowers the question is collection efficiency. How will they ensure repayments to prevent a buildup of bad loans.

The answer: technology. Credgenics, a five-year-old startup on the outskirts of New Delhi, has taken a chaotic, labor-intensive activity run by tele-callers and field agents, and put the entire process on a digital collections platform. Its clients, which include large Indian banks, nonbank lenders and fintech, upload their borrower data via a programming interface, and set rules on when they want to send automated reminders and when they want tele-callers to intervene.

The app maps out the field agents’ daily routes. Collection is a cash-heavy business, but if borrowers have bank accounts, Credgenics’ gateway can process online payments, helping to cut currency-handling costs and curb fraud. And if a loan turns delinquent, the platform can help the lenders’ legal teams issue notices and monitor arbitration and settlement.

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