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“Indian banks should make full use of technology, automate and improve their credit monitoring techniques.
Taking the traditional route would only lead to more stressed accounts and rising NPAs. There is an urgent need for a separate early warning system (EWS), so bankers can predict and assess the health of the borrower pro-actively,” says Jaya Vaidhyanathan, President, BFSI and Strategic Business Initiatives, Bahwan CyberTek.
Sharing some key findings of a survey on Credit Monitoring Practices of Indian Banks, she said, “The top challenges are inadequacy of data and non-availability of skilled workforce. There is a need to tap the relevant data and make it more meaningful.”
Banks have expressed the need for more data to strengthen the credit monitoring process.
This is in addition to customer transactional and financial data (which banks have access to), say, external data about the industry, projects, government data and so on.
Incidentally, a majority of the banks in India are yet to completely automate the Special Mention Accounts — Signs of Incipient Stress (SMA-O) monitoring process; and their systems and IT capabilities are not Red Flagged Accounts (RFA)-compliant.
And currently, from a monitoring point of view, the key focus is on using internal data.
Total exposure size and payment delays seem to be the commonly used benchmarks to select customers for further investigation. Banks will have to take a holistic view, she added.
Availability of skilled workforce for credit monitoring purposes — possibly due to staff rotation and attrition — is also a big challenge for banks.
“This can be offset to some extent by automating the process. Automation is the key for banks to derive business benefits.”
The report titled ‘Practitioners’ Insights on Credit Monitoring’ was unveiled as part of an event organised by Bahwan CyberTek.
The survey was conducted between October 2016 and February 2017.
Respondents included senior bankers chosen from public and private banks, particularly from those banks whose total asset size comprised 42 per cent of the combined assets of all scheduled commercial banks in India, as of March 2016.
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