India’s NPA crises and how technology can help


One of the biggest impacts of NPAs (Non-performing asset) is the lenders suffering from decreasing profit margins. Plus, the financial strain in the banking sector results in fewer funds being available to finance other projects which negatively impacts the larger national economy. Moreover, the banks have to maintain higher interest rates in order to maintain their profit margin. They also have to re-direct financial support from the good projects to the bad ones.

In case of public sector banks, deteriorating state of the bank means the shareholders get bad returns, which in turn means that government gets less money as a dividend. Consequently, it may affect easy deployment of funds for infrastructure/ social development leading to social/political costs. Another major impact of NPAs are the jammed investments- this can possibly lead to unemployment. Investors also suffer loss as they do not get rightful returns.

NPAs associated cases put added pressure to already pending cases with the judiciary.

Solving the NPA crises – the technology way

As per Ernst and Young survey, 56% of Indian bankers felt that “technology and data analytics should be leveraged to identify red flags and early warning signals”. Meanwhile, 86% suggested a need for a mechanism to help detect hidden NPAs.

The RBI itself has made it clear that it wants banks to automate data management and record keeping as much as possible and complete periodic regulatory reporting without intervening manually. Technology can bring about a revolutionary shift in NPA management in India. Automated solutions can not only assist in better data analysis but also enable early indicators that will alert before the situation nosedives. Therefore, this will give banks time to take appropriate measures.

Core banking applications can do the above, more so, it can put an end to the manipulations of NPAs- which is a common practice in the manual system. Asides from improving compliance, the application can add value by aggregating data across the company and its touch-points. This will make it easily accessible to the bank as a unified view of each customer.

NPA Management Solution by Intelegain

Intelegain recently developed an NPA Management solution, which is a perfect tool in assisting banks and NBFC’s to identify, investigate and take proactive actions to mitigate recovery risks. The NPA solution helps banks to manage the large documentation and compliance part that comes with managing the NPAs.

The solution is a web application for banks, its features include –

  • Access Control, Dashboards based on roles
  • Monitor, track, examine overdue loans from quick mortality indications
  • Borrower Profiling – which consists of debt profiles, loan documentation, security documents, charge status and valuation details etc.
  • Follow-up and track accounts based on diverse criteria and indicators
  • Case management, Notices / Legal Status Management, Calendar and Reminders
  • Assisting banks in initiating recovery process with workflow- like Sec 138 Criminal Suit, SARFAESI, DRT process etc.
  • Bulk data upload, Reporting Module
  • Associate Details and Performance Management
  • Expenses Management
  • Knowledge Management, Outlook Plug-in, Analytics, Litigation Management

How can NPA Management can help banks and NBFCs?

The NPA Management solution will help assess credit ratings, give early warning signals, classify special mentions accounts and take actions like a follow-up, schedule meetings, file legal cases etc. which will be the first crucial step in ensuring banks are empowered to monitor and manage their existing loan book better. Over time they will also provide valuable inputs to credit policy which would effectively enhance improve asset quality.

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