Minimum Manual Interaction Makes Loan Recovery Process Seamless: Experts

The importance of collection or debt recovery cannot be overstated in the success of a lending business. Efficient management and recovery of borrowed funds are crucial for maintaining a steady cash flow and minimising default risk. Effective systems and strategies are necessary for tracking, communicating with, and collecting from borrowers, as they ultimately determine the profitability and sustainability of a lending operation.

Ajay S, Senior Director - Risk & Collections at Uni Cards, emphasises the significance of debt recovery, stating that it often defines the success of a lending company. He describes collection as the last mile of the entire lending life cycle and emphasised its impact on a company's profit and loss. In the fintech industry, where customer onboarding primarily occurs through mobile channels, collection becomes the only touchpoint besides the initial mobile interaction.

Lov Loothra, Head of Product at Credit Saison India, comments on the challenges of timely recovery and scaling a strong collection process. He highlights the difficulty of lending money compared to retrieving it, emphasising the need for robust collection processes and product engineering, which can be challenging to scale in India.

In India, the fintech industry is regulated primarily by the Reserve Bank of India (RBI). The RBI released comprehensive guidelines for digital lending in September 2022 to ensure that loan activities are conducted in a responsible, transparent, and accountable manner.

Karthikeyan Ramaswamy, CCO-Head - Collections & Legal at axio, emphasised the importance of staying ahead of regulations. He says, " The need for gathering feedback from customers after collection calls to provide them with a first-class treatment, aiming to encourage repeat business and customer satisfaction."

Lending fintechs must adhere to the rules governing debt collection to avoid enforcement actions by the RBI, which may include fines and penalties. To streamline the process and enhance customer experience, companies have been incorporating automated channels to minimise manual interactions with customers, ensuring a seamless journey from onboarding to recovery.